Is Brexit Britain Ready for Another Foreign Central Bank Chief? Jill Ward 1 / 3 Is Brexit Britain Ready for Another Foreign Central Bank Chief? — Raghuram Rajan has delivered some uncomfortable economic truths in a career spanning the International Monetary Fund and powerful positions in his native India. The question is whether Brexit Britain is ready to hear them from another foreign Bank of England governor. The job of stewarding the U.K. As the party chooses a new leader following the resignation of Prime Minister Theresa May, her potential successors have vowed to deliver Brexit, and the latest deadline is Oct. Rajan has made sympathetic noises toward the U.K. ’s dilemma, particularly the disillusionment in parts of the country that fueled the Brexit vote.
He told the Times newspaper in March, though, that success depends on the U.K. reengaging with the world. That would start with his appointment, according to David Blanchflower, an economics professor at Dartmouth College and a former Bank of England policy maker. The other top candidates for the job, including front-runner Andrew Bailey, already work at the bank or financial regulator. “It’s a pretty unimpressive bunch, with Rajan sitting head and shoulders above the rest of them,” Blanchflower said.
The U.K. Treasury, which is responsible for hiring the next governor, declined to comment on who had applied by last week’s deadline. What is clear, though, is that Rajan has the right sort of track record. He was chief economist of the IMF from 2003 to 2006, and then worked as an adviser to the Indian government before becoming governor of the Reserve Bank of India in 2013. At the elite Jackson Hole annual economic gathering in 2005 when he was at the IMF, Rajan warned that risks were building up in the global financial system.
” Three years later, Lehman Brothers collapsed. Subramanian Swamy, an outspoken lawmaker in Prime Minister Narendra Modi’s ruling party, said Rajan was “mentally not fully Indian” and kept interest rates too high. ” Political attacks have also been a hallmark of Carney’s time at the Bank of England. Pro-Brexit Lawmaker Jacob Rees-Mogg at one point called him a “second-tier Canadian politician” who failed to get a job at home as well as an “enemy of Brexit.
” Rajan has indeed hinted the role could be too politically fraught. Central banking jobs are “very polluted,” he said in an interview with Forbes published last week. “You have to have a very good sense of where the political terrain lies and how far you can go without upsetting the balance. Those political antennae will be vital to navigate Brexit, according to Arvind Mayaram, who was the top bureaucrat in the Indian Finance Ministry while Rajan was central bank governor.
“The volatility and uncertainty that comes with it will require a very steady hand,” said Mayaram. “He can hold his own and speak his mind. He would not let go of those core principles, which would be necessary for the central bank to steer a course in very turbulent waters.
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