Bank of Canada Governor Stephen Poloz enters the final year of his term next month, and the guessing game on who could succeed him is underway.
While Poloz hasn’t officially announced whether he wants to stay, no Canadian central bank governor has been given a second mandate since the early 1980s.
Early front-runners include the governor’s chief deputy, who would be the first woman to take the job, and the head of BlackRock Inc.’s research unit, who would be the first French Canadian. Another contender is the dean of one of the country’s most prestigious business schools, who was passed over last time.
The Canadian economy Poloz helped run for six years is emerging from a sluggish expansion with interest rates close to historically low levels. Complicating matters for any successor, household debt is at a record, which will weigh on growth and make the financial system more vulnerable to any future shock.
Would-be candidates also must position themselves without knowing who will make the final decision. Polls show Prime Minister Justin Trudeau’s Liberals may lose power in October elections, and even if they win there’s no guarantee Finance Minister Bill Morneau will continue in his job. While the Bank of Canada’s board of directors conducts the selection process, the country’s finance minister and prime minister get the last word.
Canada wouldn’t be alone in making a change at its central bank. European Central Bank President Mario Draghi steps down in October, while Poloz’s predecessor and countryman, Mark Carney, is set to leave the Bank of England next January.
Second In Command
Carolyn Wilkins, 55, is currently the No. 2 official at the bank and would offer the smoothest transition, particularly given how Poloz has elevated her role of Senior Deputy Governor under his watch to one that is more prominent than usual for the job.
She oversees the central bank’s strategic planning and economic research, is involved in high-level Group of 20 and Financial Stability Board meetings, and is overseeing the review of the central bank’s inflation mandate, which will be renewed in 2021. Wilkins also fills in for Poloz once a year as chair of the Governing Council — the group of policy-makers that decides on interest rates.
Wilkins is the first woman to hold the senior deputy job and would be the first-ever female governor.
The BlackRock Economist
Jean Boivin, 46, currently heads the economic and asset allocation research unit at BlackRock Inc., the world’s largest investment firm. He was considered an economic whiz kid when Carney, then Bank of Canada governor, recruited him from academia as an adviser a decade ago.
When Boivin was subsequently promoted to deputy governor in 2010, Carney said his academic work had been “pushing the frontiers” of monetary economics. Boivin, a former pupil of Ben Bernanke at Princeton University, left his position at the Bank of Canada in 2012 to become associate deputy minister at Canada’s finance department and top aide on Group of 20 matters — a position once held by Carney — before leaving for BlackRock.
Boivin, currently based in London, would be the first francophone to run the central bank.
Carney’s Top Deputy
Tiff Macklem was senior deputy at the Bank of Canada under Carney, and briefly Poloz, before leaving in 2014 to run the University of Toronto’s Rotman School of Management, one of the country’s top-ranked business schools. He lost his bid for the top job at the central bank in 2013 to Poloz, and it’s unclear he would even apply this time, but government sources consider him a strong contender.
Macklem, 57, had more than two decades of experience at the Bank of Canada, working his way up in the research department through the 1990s before joining the governing council in 2004.
He also served as associate deputy minister in the finance department during the financial crisis, playing a key role in the global response.
The Governor Himself
Whoever holds power in Ottawa next year may choose to forgo change altogether and stick with Poloz. Before the recent precedent of single mandate governors, two terms had been the norm at the Bank of Canada.
Poloz has worked under both major political parties, appointed to the job by former Conservative Finance Minister Jim Flaherty six years ago, and touts his political independence. There also isn’t anything to stop the next government from extending Poloz’s tenure for an abbreviated term. The weaker the economy looks at the end of his mandate, the stronger the case for continuity and the better Poloz’s chances of sticking around.
Others Potential Candidates
Paul Beaudry, also a Princeton PhD, joined the Bank of Canada earlier this year as deputy governor and has been praised by Poloz as a “world-renowned scholar” in macroeconomics.
Paul Rochon is the current deputy minister at the finance department, making him the country’s third most important federal economic policy maker after Poloz and Morneau. He was also a key policy maker for Canada in the immediate aftermath of the global recession.
And recent history is on his side. Two of the last three Bank of Canada governors have held top jobs at the finance department.
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