Mark Carney, the Canadian hailed as a rock-star central banker when he became governor of the Bank of England in 2013, has only a year to go before he leaves office.
Already the race to succeed him is under way. But is this a job that any one person should have?
Mr Carney, who was busy fielding questions from the press last week about the BoE’s decision to keep interest rates on hold at 0.5 per cent, is the central figure in determining British monetary policy. He chairs the committee that sets rates and decides on unconventional measures such as quantitative easing. He also chairs the Financial Policy Committee (FPC) set up in response to the crisis of 2008 to consider and respond to systemic threats to financial stability. A third weighty task is chairing the Prudential Regulation Committee, which determines the supervision of not just individual banks but also insurers.
That’s too much power to confer on one person, however gifted, and one institution, however gilded.
There is a strong case for revisiting the reforms that have concentrated excessive authority at the BoE over and above its core responsibility in monetary policy. More immediately, there is also a strong case to shorten the length of time that any one individual can head so powerful an institution.
One of the reforms strengthening the BoE since the 2008 financial crisis is welcome. Its new capacity to tackle looming risks to financial stability makes sense. Central banks have in fact long been involved in this task. Already in the 19th century the Bank was intervening in order to quell banking panics. The “macroprudential” toolkit available to the FPC provides an alternative to the blunt instrument of raising interest rates to arrest dangerously strong credit growth. The committee can, for example, instead require banks to hold more capital against their lending or restrict loans to individuals who are borrowing high amounts in relation to their income.
The BoE’s role in supervising individual banks and insurers through the Prudential Regulation Authority is more questionable. When Labour chancellor Gordon Brown made the Bank independent in setting interest rates in 1997 he stripped away its banking supervisory job, which moved to a new body, the Financial Services Authority (FSA). Conservative chancellor George Osborne undid this in a 2012 law, handing supervision back to the central bank, arguing that the divorce had contributed to the financial crisis.
Neither the Bank nor the FSA handled the banking crisis well, but Osborne’s rationale for his reform was unconvincing. There was a similar split of functions in Canada, yet it did not succumb to the crisis. By contrast, supervision by the central bank did not spare other countries, notably the United States, where the Fed – though not the only regulator – plays a crucial part through overseeing bank holding companies. The root of the problem was that supervision was generally too lax, whoever was formally in charge. As Adair Turner, the last head of the FSA before it was disbanded in 2013, argued soon after the financial crisis, the fundamental flaw was unwarranted “intellectual assumptions about the self-correcting nature of financial markets”.
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A reversal of Mr Osborne’s supervisory reform is necessary eventually in order to tackle the undesirable accumulation of power at the BoE. But now is not the right time to take such a step. Institutional disruption exacts its own cost. Banks would hardly welcome yet another reshuffling of regulatory functions so soon after the last one.
That makes it all the more pressing to curtail the time that any one individual can head this extraordinarily influential institution. Mr Carney’s successor will be able to serve for eight years – the same as the president of the European Central Bank. This is too long, the more so since other checks and balances such as the appointment of external members to the three key committees are a feeble curb on the sway of the Bank insiders led by the governor.
A simple and manageable reform would be to limit the tenure of governors to a single term of six years, which happens to be the same as Mr Carney’s when he leaves next year. There should be no return to the former system allowing a governor to be reappointed for a second five-year term, which meant that Mervyn King was governor for 10 years between 2003 and 2013.
Whoever takes over from Mr Carney next year would do well to stick to the beat and avoid the temptation to sound off about subjects that do not lie strictly within the central bank’s remit. The governor has had good reasons to talk about climate change, since it creates risks for banks as well as insurers. But venturing too far beyond the conventional territory of central banking can give the impression of overreach.
The concentration of power at the BoE is not necessarily in its interest or that of its governor. The crucial role remains that of monetary policy, which itself has become more controversial as quantitative easing has raised asset prices and helped the government finances by lowering bond yields. When Mr Brown set the Bank free to set interest rates in 1997, the then-governor Eddie George was incensed at the chancellor’s failure to square with him that the quid pro quo was loss of bank supervision. But Mr George accepted it was a price worth paying. That remains the case.
The greatest danger facing an overmighty BoE is that there is an eventual backlash that puts in jeopardy its cherished independence in monetary policy. A celebrity leader is not what the Bank now needs.
Indeed, a degree of humility on the part of his successor may be his or her most vital quality.
Reuters
SPECS
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Brief scores:
Manchester City 3
Bernardo Silva 16', Sterling 57', Gundogan 79'
Bournemouth 1
Wilson 44'
Man of the match: Leroy Sane (Manchester City)
SPEC%20SHEET%3A%20APPLE%20M3%20MACBOOK%20AIR%20(13%22)
%3Cp%3E%3Cstrong%3EProcessor%3A%3C%2Fstrong%3E%20Apple%20M3%2C%208-core%20CPU%2C%20up%20to%2010-core%20CPU%2C%2016-core%20Neural%20Engine%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EDisplay%3A%3C%2Fstrong%3E%2013.6-inch%20Liquid%20Retina%2C%202560%20x%201664%2C%20224ppi%2C%20500%20nits%2C%20True%20Tone%2C%20wide%20colour%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EMemory%3A%3C%2Fstrong%3E%208%2F16%2F24GB%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStorage%3A%3C%2Fstrong%3E%20256%2F512GB%20%2F%201%2F2TB%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EI%2FO%3A%3C%2Fstrong%3E%20Thunderbolt%203%2FUSB-4%20(2)%2C%203.5mm%20audio%2C%20Touch%20ID%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EConnectivity%3A%3C%2Fstrong%3E%20Wi-Fi%206E%2C%20Bluetooth%205.3%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EBattery%3A%3C%2Fstrong%3E%2052.6Wh%20lithium-polymer%2C%20up%20to%2018%20hours%2C%20MagSafe%20charging%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECamera%3A%3C%2Fstrong%3E%201080p%20FaceTime%20HD%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EVideo%3A%3C%2Fstrong%3E%20Support%20for%20Apple%20ProRes%2C%20HDR%20with%20Dolby%20Vision%2C%20HDR10%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EAudio%3A%3C%2Fstrong%3E%204-speaker%20system%2C%20wide%20stereo%2C%20support%20for%20Dolby%20Atmos%2C%20Spatial%20Audio%20and%20dynamic%20head%20tracking%20(with%20AirPods)%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EColours%3A%3C%2Fstrong%3E%20Midnight%2C%20silver%2C%20space%20grey%2C%20starlight%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EIn%20the%20box%3A%3C%2Fstrong%3E%20MacBook%20Air%2C%2030W%2F35W%20dual-port%2F70w%20power%20adapter%2C%20USB-C-to-MagSafe%20cable%2C%202%20Apple%20stickers%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20From%20Dh4%2C599%3C%2Fp%3E%0A
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
THURSDAY'S FIXTURES
4pm Maratha Arabians v Northern Warriors
6.15pm Deccan Gladiators v Pune Devils
8.30pm Delhi Bulls v Bangla Tigers
How does ToTok work?
The calling app is available to download on Google Play and Apple App Store
To successfully install ToTok, users are asked to enter their phone number and then create a nickname.
The app then gives users the option add their existing phone contacts, allowing them to immediately contact people also using the application by video or voice call or via message.
Users can also invite other contacts to download ToTok to allow them to make contact through the app.
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Brief scores:
Day 1
Toss: South Africa, field first
Pakistan (1st innings) 177: Sarfraz 56, Masood 44; Olivier 4-48
South Africa (1st innings) 123-2: Markram 78; Masood 1-4
UAE currency: the story behind the money in your pockets
Women & Power: A Manifesto
Mary Beard
Profile Books and London Review of Books
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
