Bloomberg News

Carney Said to Be Leading Candidate to Succeed Draghi at FSB

October 15, 2011

(See {GMEET <GO>} for more on the G-20 meeting.)

Oct. 15 (Bloomberg) -- Bank of Canada Governor Mark Carney is the leading candidate to replace Mario Draghi as head of the body charged with rewriting the rules of international finance, according to two officials from Group of 20 nations.

If chosen, Carney would take the helm of the Financial Stability Board from Bank of Italy Governor Draghi, who next month becomes president of the European Central Bank. Swiss central bank President Philipp Hildebrand is also being considered for the job. The officials spoke on condition of anonymity because a decision hasn’t been made yet.

Carney, 46, worked at Goldman Sachs Group Inc. for more than a decade before becoming a policy maker in 2003 and then chief of Canada’s central bank in 2008. He has pushed for tougher regulations for global lenders and clashed with banking executives over new rules requiring them to hold more capital.

In a Sept. 25 speech to a banking group in Washington, he said new financial-market regulations wouldn’t hobble the global economic recovery, citing the recent UBS AG trading loss of $2.3 billion as an example of why greater controls are needed.

“The implementation timetable” for the new rules, Carney said in the speech to the Institute of International Finance, “begins in two years and ends in 2019.”

“It is difficult to believe that prolonging this implementation phase even further would have a material impact on real economic outcomes,” he said.

Capital Surcharges

The FSB brings together regulators and finance ministry officials from the G-20, as well as standard-setting bodies such as the Basel Committee on Banking Supervision. Switzerland is not a G-20 member. The FSB’s next chairman would oversee the implementation of planned capital surcharges of as much as 2.5 percent for the world’s biggest banks.

Bank watchdogs have clashed with some lenders over the additional capital rules. Jamie Dimon, chief executive officer of JPMorgan Chase & Co., and Bank of America Corp. CEO Brian T. Moynihan are among bankers who have said that the proposals would constrain lending and hurt the economy. Dimon, who has said they are “anti-American,” criticized Carney at a closed- door meeting in the presence of more than two dozen bankers and finance officials, the Financial Times reported on Sept. 26.

G-20 officials today will also discuss formalizing the powers of the FSB to ensure new rules agreed by leaders are implemented, a separate G-20 official told reporters yesterday. The FSB has said that work on the surcharge rules should be finished in time for them to be approved at a summit of leaders from the G-20 in Cannes, France, on Nov. 3-4.

Carney helps to oversee a Canadian financial system that largely escaped the last financial crisis and has been ranked the world’s soundest for a fourth straight year by the Geneva- based World Economic Forum. The country’s three largest banks -- Royal Bank of Canada, Toronto-Dominion Bank and Bank of Nova Scotia -- are among the world’s 20 largest by market capitalization.

--Editors: Matthew Brockett, Simon Kennedy

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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