Bank of England job vacancy points to Vickers
It is the most powerful job ever advertised in Britain. It’s not just that the Bank of England Governor sets monetary policy, interest rates for savers and for borrowers.
Nor even is it just that Sir Mervyn King managed de facto to get Bob Diamond fired from Barclays. Next year, the bank gains huge new powers over Britain’s banks and, indeed, the entire process of credit creation.
Not just that. This appointment, made by the Queen on the advice of the PM and chancellor (in turn on the advice of interviews conducted by senior Treasury mandarins) by the end of the year, will be for a strictly non-renewable eight-year term. From 2013 until 2021, the new BoE governor will have an incredible degree of power and autonomy.
Today, the chancellor announced the publication of a job advert, detailed below. This is the first time a job like this has been advertised. I deduce two important signals from the text. Firstly, the emphasis is on finance and financial stability. The candidate “will have an advanced understanding of financial markets and good economic knowledge”.
Good economic knowledge? The presumption has been for the past decade that the governor should be a world-class macroeconomist. This suggests that the future chair of the interest rate-setting monetary policy committee does not even need to be a formally trained economist. He or she, who decides when to unwind quantitative easing, for example, might not have an economics degree.
No, the emphasis is clearly on the bank’s new financial functions, and the Treasury requires the new governor possesses an ‘advanced understanding’ of those financial markets.
Second is the banker question. The Treasury specifically will look at bankers or former bankers. The candidate will have experience “working in, or with, a central bank or similar institution; or will have worked at the most senior level in a major bank or other financial institution.”
But there is a caveat for those bankers recently placed under an ethical cloud: “He or she will be a strong communicator, have good interpersonal skills and will be a person of undisputed integrity and standing.” That rules out quite a few.
Where does that leave us? Door wide open for the Deputy Governor Paul Tucker, but also perhaps even more for Lord Turner of the FSA (who has been busy making speeches and writing letters to Barclays). A dark horse like Jim O’Neill of Goldmans should not be discounted. There is no specific direction against a non-Briton, so perhaps those stories about Canadian central bank chief Mark Carney will re-emerge.
What is startling, however, given the specific direction on high-level bank knowledge, is the lack of bankers likely to make the shortlist. Three very viable candidates come from banks with serious recent question marks about their institutions’ conduct: Lord Green, John Varley, and Peter Sands. Imagine their Treasury Select Committee confirmation hearings.
Then again, does it make any sense to rule out a figure like Sands, who has detailed experience of the sort of macroprudential credit controls in Asia, that will be used to help prevent another calamitous credit bubble in the future? Put more simply, does the fact that Fred the Shred, Adam Applegarth, Peter Cummings and even Bob Diamond could not be considered make an argument for no former banker doing a good job for Britain?
There is another candidate, who I think this job ad seems to have been designed for. In-depth knowledge of financial markets and new regulations, and a detailed vision of future banking, but also a reputed economist who has been avoiding controversy over the past year. Somebody who would, I am sure, be embraced by both sides of the coalition, and the opposition. One of the first members of the monetary policy committee, and the former chief economist of the Bank of England. Sir John Vickers.
Having said that, this is a unique opportunity for Britain to assess its monetary policy. Is QE really working? If it is, why are the Germans so against it? Is an inflation target of 2 per cent plausible in 2021, when the new governor’s term ends? The new governor will have an unwanted role too in settling some difficult economic and currency questions around Alex Salmond’s race for Scottish independence. Perhaps a Scot should apply?
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There are 4 comments on this post
I suppose it would be asking too much for the selection panel which will presumably put a short list in order of preference to Treasury Ministers, etc, NOT to consist solely of senior Treasury mandarins. Perhaps an academic economist or someone from the World Bank, EIB or even the USA’s financial regulator might provide a panel with less of a tendency to “group-think” and might also provide more public reassurance about the sea-green incorruptibility and integrity of the chosen one(s). And for heaven’s sake, can we have someone who will understand that the banks need to be brought more into line with the culture of integrity and less greed, who can balance the short term need to maintain the City while at the same time helping to re-balance the UK economy away from financial services based predominantly in London to a more mixed services/manufacturing/research/green and high tech industries outside London. In a culture that is short-termist, we need someone who is prepared to fight for the medium to long term, instead of allowing short termism to destroy the longer term benefits.
Faisal,
Forgive me if I don’t take this seriously.
In fact I am finding it difficult to resist paroxysms of mirth.
So, the people who helped cause all thievery and criminality in the first place will now select one of their own for a post with “…an incredible degree of power and autonomy.”
I’ll give you one guess as which way the appointed one will be biased.
You don’t need to be an economist full of sophist bullshit for that either.
The eight year term suggests that this appointment is intended to be a drag on the following Government. Moreover, the decision to eschew an economic leader in favour of some financial whiz-bang ‘innovator’ just like those who got us into all this trouble in the first place.
Most folk favour dividing up this powerful and wide-ranging job so that issues will be analysed from varying perspectives. But our whiz-bang government is of the TINA mindset; that only the financial markets should determine our long-term economic future. And that only their own solutions can be considered.
Oh dear! Here’s another fine mess they’re getting us into!
Given the current banking situation in the UK, the next BoE Governer should bring with them a certain level of transparency and credibility. At the moment there are some candidates such as Adair Turner who seems to be the best fit given the other candidates.
Having said that, whoever takes on the post will have their task clearly cut out. Clean up the banking system and set forth an economic policy that will help boost the economy rather than cut spending in the name of austerity.