Race to Run Bank of Canada Begins With Poloz Bowing Out in June

(Bloomberg) --

Stephen Poloz’s announcement that he won’t seek a second term as governor of the Bank of Canada kicked off the guessing game on who will succeed him in June.

The contest comes as the central bank stubbornly keeps the nation’s benchmark interest rate among the highest of all advanced economies, so one consideration for Prime Minister Justin Trudeau may be whether he has a preference for cheaper money.

But given his governing Liberals have been just as wary about the country’s elevated levels of household debt, the focus may turn elsewhere. Among the considerations may be how to broaden the central bank’s toolkit to give a greater role to fiscal policy in the face of limits to monetary policy, and which candidate is seen as the best equipped to manage any future financial crisis or recession.

Early front-runners include Carolyn Wilkins, the governor’s chief deputy; Jean Boivin, the head of BlackRock Inc.’s research unit; and Tiff Macklem, the dean of one of Canada’s most prestigious business schools.

Carolyn Wilkins

Wilkins, 55, is currently the No. 2 official at the bank and would offer the smoothest transition, particularly given how Poloz has elevated her role of senior deputy governor under his watch to one that is more prominent than usual for the job.

She oversees the Bank of Canada’s strategic planning and economic research, is involved in high-level Group of 20 and Financial Stability Board meetings, and is overseeing the review of the bank’s inflation mandate, which will be renewed in 2021. Wilkins also fills in for Poloz once a year as chair of governing council -- the group of policy makers that decides interest rates.

Wilkins is the first woman to hold the senior deputy job and would be the first-ever female governor.

What Bloomberg’s Economists Say

“The shift in leadership will come at a time when there are divergent views on the need for monetary policy stimulus. Senior Deputy Governor Carolyn Wilkins, a clear front-runner for the job, recently gave a talk that stressed not letting the BoC’s guard down with respect to household financial vulnerabilities. That has played a role in the central bank’s reluctance to add an insurance cut amid slowing global growth and a factory downturn.”

Andrew Husby. Read the full report here

Jean Boivin

Boivin, 47, currently heads the economic and asset allocation research unit at BlackRock, the world’s largest investment firm. He was considered an economic whiz kid when Mark Carney, then Bank of Canada governor, recruited him from academia as an adviser a decade ago.

When Boivin was subsequently promoted to deputy governor in 2010, Carney said his academic work had been “pushing the frontiers” of monetary economics. Boivin, a former pupil of Ben Bernanke at Princeton University, left the Bank of Canada in 2012 to become associate deputy minister at Canada’s finance department and the top aide on G-20 matters -- a position once held by Carney -- before being hired by BlackRock.

Boivin, currently based in London, would be the first francophone to run the central bank.

Both he and Wilkins have already begun to think deeply about how to better coordinate monetary and fiscal policy. Boivin co-authored a report in August that proposed a plan on how governments and central banks can coordinate to quickly stimulate economies in the next recession.

Stronger fiscal and monetary coordination is an important part of the current mandate review that Wilkins is leading.

Tiff Macklem

Macklem was senior deputy at the Bank of Canada under Carney, and briefly Poloz, before leaving in 2014 to run the University of Toronto’s Rotman School of Management. He lost his bid for the top job at the central bank in 2013 to Poloz, and it’s unclear he would even apply this time, but government sources consider him a strong contender.

Macklem, 58, had more than two decades of experience at the central bank, working his way up in the research department through the 1990s before joining the governing council in 2004.

He also served as associate deputy minister in the finance department during the financial crisis, playing a key role in the global response.

Other Contenders

Among other names circulating as potential candidates include Paul Beaudry, who joined the Bank of Canada earlier this year as deputy governor; Evan Siddall, head of Canada Mortgage and Housing Corp.; Paul Rochon, the current deputy minister of finance, and David Wolf, a portfolio manager at Fidelity Investments and former adviser to Carney at the Bank of Canada.

To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Stephen Wicary, Chris Fournier

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