Former Bank of England policy maker Charles Goodhart said U.K. finance minister George Osborne may struggle to find a successor for central bank Governor Mervyn King untainted by the financial crisis and banking scandals.
“There’s a general impression that whoever gets appointed needs to be as pure as Caesar’s wife,” Goodhart said in a telephone interview in London yesterday, referring to Julius Caesar’s comment that his wife must be above suspicion. “In the present climate, and after all the events of the past five to six years, it’s actually quite hard to find a Caesar’s wife.”
Osborne will shortly begin the search for a successor to King, who is scheduled to retire in June, and his task may have been complicated after the Libor scandal embroiled several potential candidates. At the same time, lawmakers are debating handing the central bank sweeping new powers over financial stability and bank oversight.
Goodhart, a professor at the London School of Economics who served as a founding member of the central bank’s Monetary Policy Committee from 1997 to 2000, said the changes may give one individual too much responsibility.
“I think there is some truth in the claim,” Goodhart said. “It’s difficult to argue against the suggestion that it does concentrate power very much in a person.”
Still, the job is doable and its expanded power “makes it even more important to appoint a really excellent person for that position,” he said.
The search for a governor will begin as soon as this month and the successful candidate may be announced by the end of the year. Bank of England Deputy Governor Paul Tucker and Financial Services Authority Chairman Adair Turner have been linked to the job, as has former top U.K. civil servant Gus O’Donnell.
While Tucker was the frontrunner to replace King, his odds at bookmakers lengthened earlier this year after he was dragged into the Libor scandal.
“The various problems in the area of banking and finance have been so general that an awful lot of the possible candidates have had their credentials for appointment made more complicated,” Goodhart said. Still, candidates with a financial industry background shouldn’t necessarily be ruled out, he said.
“It’s not necessarily the case that everybody has got to be 100 percent experienced in all aspects of the role of being governor,” Goodhart said. The appointment is likely to be made toward the end of 2012 “to give the incoming governor time to get up to speed,” he said.
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