The Business: Why Should a Clever and Powerful Man Want to Become Governor of the Bank of England? He Has to Make the Same Decision, Month after Month. (Columns)

By Hosking, Patrick | New Statesman (1996), May 13, 2002 | Go to article overview
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The Business: Why Should a Clever and Powerful Man Want to Become Governor of the Bank of England? He Has to Make the Same Decision, Month after Month. (Columns)


Hosking, Patrick, New Statesman (1996)


I can see why Sir Howard Davies has been mooted as a candidate to take over from Sir Eddie George as governor of the Bank of England. He is politically sure-footed, brainy, populist, ambitious; and he has the CV of a serial overachiever. He's already been the deputy governor in Threadneedle Street, as well as running the Audit Commission and the Confederation of British Industry. He and Mervyn King, the current deputy governor, are regarded as the favourites to take over when Steady Eddie retires in 13 months.

But why should he want the job? The bank governorship has great prestige, but compared to Davies's current post -- running the Financial Services Authority -- it is a narrow, Pooterish sort of position. There is only one important decision to be made, and it is the same one, month after month: should interest rates go up, go down, or stay the same?

The only intellectual challenge is to immerse oneself ever deeper in the ocean of economic data that floods each day into the bank's computers. Setting monetary policy is difficult and the bank has acquitted itself well so far, but you have to be utterly consumed by macroeconomics to find it fulfilling, and you have to be satisfied with lust the one lever on your train set.

I exaggerate a bit. The governor has other tasks. He runs a big printing press, he guards a lot of bullion and he is bank manager to the government. Also under his control is the excellent financial stability unit, where officials scour the financial world to identify the next landmine likely to threaten the fragile system. Then everyone ignores their warnings.

The governor may have a modest influence on the euro debate, but the decision will really be made in Downing Street. The bank will just have the logistical headache of making it work if the decision is yes, and then the humiliation of winding itself down when interest rate policy moves to Frankfurt.

The governorship has some nice perks. The livened servants are good for the ego, the fittings are luxurious - and who else in London EC2 can boast his own lawn? At the Financial Services Authority, the chairman sits in an open-plan office in Docklands. But for intellectual challenge, variety and (let's be honest) sheer arse-kicking power, his is a far more agreeable post.

From money-laundering to insider-dealing and market abuse, the FSA has the authority to investigate and prosecute. Financial services is one of the few areas where Britain is world class, and Davies is the undisputed head cop.

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