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Carney: The FSB’s outspoken new chair

Monday 7 November 2011 – by Karina Whalley

 Forty-six year-old Carney is the youngest central bank chief of any of the G20 countries but the highly-vocal new chairman has a reputation for locking horns with both global regulators and banking chiefs.

Mark Carney has taken the helm of the Financial Stability Board becoming chairman on 4 November. The Bank of Canada governor was named as successor to Mario Draghi for a minimum three-year appointment.

A staunch supporter of the Basel III regulations, Carney has thrown his support behind the controversial countercyclical buffers. Having successfully pushed for a ‘Canadian approach’ to be adopted by the Basel Committee on Banking Supervision, he has since argued that the implementation of a buffer could increase the net benefits of reforms by as much as 20 per cent.

Carney derided a study showing GDP output would decrease due to new regulations, saying that the Bank of Canada’s calculations predict that Basel III reforms will make the world economy around $13tn (€9.7tn) because of the reduced risk of bank failures.

“In short, while the worsening global economic outlook has implications for bank performance, it does not provide a rationale for delaying the implementation of Basel III,” he said at a conference in September this year.

Carney told the audience that the G20’s move to boost capital requirements by adopting regulations such as the Basel III accord will ultimately provide a path to a more resilient system and an end to government support.


JP Morgan chief Jamie Dimon lambasted the additional capital requirements being forced upon worldwide banks which ended in a now infamous clash with Carney during a closed doors discussion. The new FSB chairman has shown he is not intimidated by bank chiefs fighting against the need for reform.

However, he has equally taken a stand against global regulators on policies with which he does not agree. At the G20 Summit in Toronto last year, Carney was crucial in leading the opposition against a global-wide introduction of a financial transaction tax, which he has labelled a “distraction” from more pressing issues regarding capital and liquidity reforms and the world economic recovery.

Carney has also used speeches to call for bail-in and contingent capital mechanisms to be adopted globally as a solution to too big to fail, and for maximum G20 cooperation as countries, including Canada, set about developing domestic counterparty systems to regulate the over-the-counter derivatives markets.


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