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Mark Carney: The Canadian to save England’s economy?

Jennifer Kwan

In taking the top job at the Bank of England, Mark Carney is stepping outside of his comfort zone, leaving one of the world's most stable economies to help fix a region that faces hefty hurdles.

Carney, who characterized the decision as being difficult but the right one, says he looks forward to the challenge, even if it is rife with monetary, economic and banking issues he must carefully manage as the U.K. faces the threat of a triple-dip recession.

Carney's to-do list is long. He must help revitalize a bigger economy that, according to the latest figures, grew a slim 1 per cent in the third quarter. Inflation is a nagging problem. Carney must help figure out what to do with the UK's troubled banking system and consider how to handle quantitative easing, or bond buying from newly-created money to boost economic growth.

All this as the Organisation for Economic Cooperation and Development, a Paris-based think tank, slashed its global growth forecasts on Tuesday. It warned that the debt crisis in the recession-hit euro zone is the greatest threat to the world economy. It also sums up the UK's growth outlook like this: the global economic slowdown, euro area uncertainty, necessary fiscal retrenchment and private deleveraging are generating headwinds for the economy.

"He's a very capable and ambitious individual and may well want greater challenges," said Paul Ferley, assistant chief economist at Royal Bank of Canada. "If that's what he wants, he's certainly going to get it at the Bank of England."

The Brits are cautiously optimistic with some press using soccer analogies to rationalize the surprise announcement on Monday about Carney, the first non-Brit to head Threadneedle Street, the bank's nickname, in its 318-year history.

"Let's hear it for Mark Carney, the Treasury's Sven-Göran Eriksson," the Guardian noted, referring to a foreigner brought in to manage England's national soccer team in the early 2000s.

The Telegraph stated "True enough, central banking is not Premier League football, where a foreign sounding name is a positive pre-qualification for management." But, Jeremy Warner went on to ask, "If an Italian, Mario Draghi, can be thought an acceptable central banker to Germany and France, why not a Canadian to Britain?"

But let's be honest, Carney's resume probably didn't hurt his chances. At 47, he is a former Goldman Sachs investment banker so he has the hands-on, private-sector experience needed to navigate financial markets. He brought that experience to the Bank of Canada when he was appointed governor in early 2008, and as its boss won plaudits around the world for helping to ensure Canada avoided being dragged down in the dumps during the financial crisis.

As chair of the Financial Stability Board, set up by the G20 to oversee regulation and reform in the global financial system, he's got credibility outside of Canada. Time Magazine also listed Carney as a top influential person in 2010, saying he was charming and wicked smart. On a personal level, his wife is British.

In the end, Carney has his work cut out for him and the UK is certain to benefit from his services. As Canada's Finance Minister Jim Flaherty put it: "It is our loss. Of course it is."