Tyler Cowen interviews Mark Carney: Why a trend of recruiting central bankers from other countries?

Wide raging interview of Mark Carney in typical Tyler Cowen style. Lots of insights with wit thrown in between.

COWEN: Now, this — yourself through Stanley Fischer — as you know, there’s a trend of recruiting central bankers from other countries. So far, it seems it’s worked quite well. But what are the limits of this process of recruiting leaders in government from abroad? You wouldn’t name someone to run the Department of Defense who is from another country, right?


COWEN: What’s the margin where that doesn’t work anymore?

CARNEY: Well, candidly, I think it was a relatively unique set of circumstances when I was put in place. The UK had had a very bad financial crisis. We had a new central bank, in other words; the powers had been tripled, it had been doubled in size. There’s an opportunity to bring an outsider in, in order to help try to make that work. I don’t know. I’m a little hard pressed to see the set of circumstances where it would be immediately obvious to bring an outsider back in again.

My answer is there have been examples. The governor of the Bank of Ireland, for example, is a third example: Gabriel Makhlouf, head president. But it’s very much the exception as opposed to the rule. It relies heavily on the technocratic nature of the role.

COWEN: Are there classes of decisions where such a head should recuse himself or herself, or would just feel hesitant — very risky decisions or extending foreign lines of credit, which the Fed of course has done a lot, or exchange rate policy?

CARNEY: No. I think if you take these roles, you have to be able to take every decision no matter how small or how large. I never felt any circumstance where either I didn’t have adequate information or, God forbid, that I was somehow conflicted in my loyalties that it would have influenced the decision.


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