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Ottawa's loss of a high achiever is England's gain

THE surprise appointment of Mark Carney to lead the Bank of England has been received as a compliment and a loss in Canada.

In September 2008, as interbank capital liquidity hoarding precipitated a financial tsunami from which Europe is still reeling, Mr Carney ensured liquidity for borrowers through the central bank, cut interest rates to a historically low 0.25 per cent, kept inflation under control, and ensured Canada borrowed at the best possible rates.

The 47-year-old Harvard and Oxford-educated Canadian economist has a mission to reform the banking system so that taxpayers never again have to bail out ''too-big-to-fail'' banks.

Former Canadian prime minister and Minister of Finance Paul Martin said he was ''very disappointed'' to see Mr Carney leave Canada. ''He has been an outstanding governor of the Bank of Canada as well as a very progressive head of the financial stability board,'' he said.

Mr Carney's appointment ''bodes well for the economies in Canada, the United States, China and elsewhere'', Mr Martin said.

''If what you're looking for is somebody who understands the inner working of the banking system domestically, but at the same time its interconnections globally, and what has to be done globally, I think you've got a very, very strong person.'' Following the collapse of Lehman Brothers in 2008, many Canadian banks and financial institutions held worthless mortgaged-backed bonds, while other big players held none. Mr Carney managed to negotiate a bailout settlement to share the losses.


He ''turned his back on a very lucrative career in private banking to go into a public service job where his first job was to try and bang heads together and try and remedy an almost impossible situation'', said Duncan Cameron, from the Centre for Global Political Economy at Simon Fraser University.

''A lot of people wouldn't want to get up in the morning if they had to face that kind of situation, and he seems to have thrived on it.''

The Canadian banking system has often been compared with the Australian banking system.

The sector there, made up of five large banks, has been ranked the most sound in the world five years in a row by the World Economic Forum, which praised it for being ''well capitalised, well managed and well regulated''.

Canadian banks make loans on a case-by-case basis, depending on the creditor's ability to repay. Many of the high-risk financial instruments that exacerbated the subprime mortgage fiasco in the US do not exist in Canada.