A week ago, Mark Carney was an unqualified superstar of central banking, the fair-haired boy of finance about to leave the Great White North to take on a more prominent, more challenging role fixing Britain’s debt-riddled economy.

What a difference a week makes. Carney now finds himself in the midst of two brewing political wars — one at home, one on the other side of the pond.

THE WAR AT HOME

The Globe and Mail on Saturday published a story recounting efforts by what it called “a tight network of Liberals” to woo Carney into running for the Liberal Party leadership. In what immediately spawned concerns about a possible conflict of interest, Carney was reported to have taken phone calls from senior Liberals, asked questions about the race and even spent a week during the summer at Liberal MP Scott Brison’s home in Nova Scotia.

“Mr. Carney refused to go into details about the conversations, or explain why he didn’t immediately shut down the campaign as a non-partisan public servant working under a Conservative government,” the Globe reported.

(STORY CONTINUES BELOW SLIDESHOW)

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  • Daily Express: He looks like George Clooney!

    Mark Carney may have been born in a tiny Canadian town but the man, who bears a distinct likeness to movie star George Clooney, is unlikely to fail the Britishness test when he makes his application for UK citizenship. <a href="http://www.express.co.uk/posts/view/360811/Mark-Carney-is-the-George-Clooney-look-a-like-with-links-to-Britain" target="_hplink">Read more...</a>

  • BBC: Carney faces many problems at BoE

    When you look in the round at what Mr Carney has taken on, it is easy to see why he fled when originally wooed by Mr Osborne - because it is reasonable to ask whether any mortal can do this job. <a href="http://www.bbc.co.uk/news/business-20509027" target="_hplink">Read more...</a>

  • The Guardian: Carney means no change

    Today the chancellor confirmed that there will be no real change at theBank of England. There will be no change to the Treasury and Bank of England's obsession with inflation targeting and "price stability". Above all, he confirmed that there will be no reining-in of the banks; that banks will not be re-structured - to separate the retail and investment arms, and ensure that banks are no longer too big to fail. He confirmed this by appointing an ex-Goldman Sachs banker, Mark Carney, as governor of the Bank of England. <a href="http://www.guardian.co.uk/commentisfree/2012/nov/26/mark-carney-appointment-bank-england" target="_hplink">Read more...</a>

  • Daily Mail: A big job ahead

    The scale of the job facing Mr Carney is enormous. The independent Bank of England as established by Gordon Brown in 1997, was to be a narrow, monetary and interest-rate-setting body. The financial crisis of 2007-08 and recession that followed changed all of that.... The borrowings on the balance sheets of London-based banks are four times the size of the country's total output - giving an indication of the size of the task that lies ahead. Indeed, it was the sheer scale of the challenge that finally persuaded Mr Carney that it was worth doing. <a href="http://www.dailymail.co.uk/debate/article-2238939/Bank-England-governor-Mark-Carney-Sharp-tack--god-hell-need-be.html?ito=feeds-newsxml" target="_hplink">Read more...</a>

  • Daily Telegraph: Carney-mania takes hold

    Is there any stopping Carney-mania? Those of us who 24 hours ago couldn't have identified Mark Carney, even if he was wearing a T-shirt emblazoned with "I'm the Governor of the Canadian Central Bank" in 110pt type, now stroke our chins and swap our best Carney insights. He was voted the most trustworthy Canadian in a poll conducted by Readers Digest (Canada). He has four children. He paid $800,000 for his house in Ottawa, apparently, although he undertook $95,000 of improvements. Did they extend out the back or convert the attic? I don't know, yet. And Canada didn't have a banking crisis, you know. Only it did, in the 1990s, and the recovery and reorganisation put it in place afterwards left it in good shape ahead of the much bigger financial crisis which hit the US and the UK particularly hard. And Canada knows how to regulate its banks, only that wasn't actually Carney's job. This is most of what we know so far. <a href="http://blogs.telegraph.co.uk/news/iainmartin1/100191554/carney-the-canadian-is-the-worlds-greatest-central-banker-since-alan-greenspan/" target="_hplink">Read more...</a>

  • Financial Times: Carney bound to disappoint

    The new governor's problem now is that he is bound to disappoint. Unless by some miracle the British economy soon heads towards the sunlit uplands, those now so keen to lavish praise on Mr Carney will start asking whether Britain has got what it paid for. The media will ask awkward questions about his pay and perks; MPs will criticise him at once for not being tough enough on the banks and for choking off credit to small businesses. <a href="http://www.ft.com/intl/cms/s/0/ddbd273c-38b2-11e2-bd13-00144feabdc0.html#axzz2DRpaffMc" target="_hplink">Read more...</a>

  • The Independent: An outsider wins

    So who are the City getting in Mr Carney? On paper he's an outsider, although he will seek British citizenship, but a look on his CV shows that the Square Mile is getting one of their own. A 47-year-old former Goldman Sachs veteran of 13 years, doing stints in New York, London, Tokyo and Toronto, he will have no trouble speaking to the bankers in a language they understand. After 10 years of Sir Mervyn and "the MA way", in reference to the monetary analysis unit which held sway as the central bank took on a decidedly academic bent, Chancellor George Osborne is drawing a stark line in the sand and setting a new course for the Bank of England. <a href="http://www.independent.co.uk/news/business/analysis-and-features/mark-carney-the-outsider-wins-again-8353060.html" target="_hplink">Read more...</a>

  • Daily Telegraph: A rift at the BoE?

    Mark Carney, the incoming Governor of the Bank of England, has attacked Andy Haldane, one of its most senior regulators and a rising star, for failing to have a "proper understanding of the facts" on bank regulation... Mr Carney, who is chairman of the global regulator the Financial Stability Board (FSB), criticised Mr Haldane, the Bank's executive director for financial stability, for proposals he made to simplify bank regulation and encourage banks to break up. [Haldane's] proposals ran counter to Mr Carney's work at both the Bank of Canada and the FSB. In an interview last month with Euromoney, Mr Carney said: "I thought Andrew Haldane's speech was uneven... Basle I was simple and it drove us off a cliff. Andrew Haldane's conclusion is not supported by the proper understanding of the facts." <a href="http://www.telegraph.co.uk/finance/economics/9705748/Carney-attack-on-Haldane-hints-at-Bank-of-England-rift.html" target="_hplink">Read more...</a>

  • The Times of London: A political coup

    The appointment of Mark Carney is a political coup. The decision is imaginative while also being safe. It is unusual but not unprecedented to appoint a foreign national to be head of a central bank. Stanley Fischer, Governor of the Bank of Israel, took Israeli nationality and renounced his American citizenship on his appointment. Mr Carney will similarly take British citizenship. <a href="http://www.thetimes.co.uk/tto/business/industries/banking/article3612926.ece" target="_hplink">Read more...</a>

  • The Independent: A British failure

    If this appointment is a celebration of Britain's willingness to scour the worldfor people to run our great institutions - from football clubs to car companies - it is also an acknowedgement of our failures. In central banking this is in theory the third most important job in the world, for the US Federal Reserve and the European Central Bank naturally rank higher. But in practice it is arguably more interesting, partly because it is more wide-ranging, combining bank supervision with monetary responsibility, and artly because London's central role in international finance gives it global significance. <a href="http://www.independent.co.uk/voices/comment/george-osborne-chose-wisely-in-appointing-mark-carney-as-governor-of-the-bank-of-england-8352769.html" target="_hplink">Read more...</a>

It’s not clear whether the campaign was Carney’s to shut down. As The Huffington Post Canada has reported before, there were various attempts to draft Carney for the Liberal leadership, but the central bank governor did not publicly encourage or endorse these campaigns.

So what ended Carney’s flirtation with the Liberal leadership? The National Post’s John Ivison wrote in November that Justin Trudeau’s entry into the race convinced Carney not to run.

The Globe reports it as a case of cold feet: Carney feared he would be yet another Liberal leader with name recognition and popularity, but who would prove too inexperienced on the campaign trail.

All the same, the knives are coming out for Carney, with a Globe editorial calling on the Bank of Canada to reassure the public Carney isn’t using the Bank of Canada to further a political agenda.

“The Governor of the Bank of Canada has two primary tasks: Follow the bank’s mandate as closely as possible and to keep the bank as free as possible from the appearance of partisan influence,” the Globe wrote. “The latter role can’t be overemphasized.”

In a statement released to the press on Monday morning, the Bank of Canada said Carney and Brison have been friends for a decade.

[T]his visit does not breach the Bank’s Conflict of Interest guidelines in any way,” the BoC said. “Neither the Bank of Canada, nor Governor Carney, have an actual or potential commercial or business relationship with Mr. Brison. Mr. Carney’s acceptance of hospitality provided by a personal friend does not arise out of ‘activities associated with official Bank duties’. Nor can it be defined as partisan or political activity.”

THE WAR OVER THERE

So that’s the Canadian political baggage Carney will take across the pond, where another war is brewing over what his plans may or may not be for the Bank of England.

In a speech to financial analysts in Toronto last week, Carney extolled the virtues of “NGDP targeting”: the idea that a central bank should set policy in order to get a certain amount of economic growth.

Currently, the Bank of Canada (like the Bank of England) bases all its policy decisions on one factor: Inflation. (The U.S. Federal Reserve works somewhat differently; it also has an unemployment rate target.) So the Canadian government gives the central bank an inflation target (typically 2 per cent in Canada) and the bank then sets interest rates and other policies (such as printing or not printing cash) in order to get the desired inflation rate.

But for the past several years, an economics blogger named Scott Summer has been pushing the idea that banks should ditch their inflation targets and try to get a certain amount of nominal economic growth happening instead — this is known as NGDP targeting.

It’s an idea that’s gaining steam, largely because the past several decades of only targeting inflation (the legacy of the stagflation of the 1970s, which convinced central bankers inflation is the real problem) haven’t gotten very good results in recent years.

So Carney came out with a speech suggesting NGDP targeting may not be a bad thing, and half of Britain’s financial elite threw a fit.

Bank of England economist Spencer Dale, soon to be Carney’s employee, publicly slammed the idea in the pages of the Daily Telegraph, saying it would ruin the BoE’s credibility if it stopped paying attention to inflation, which Dale says is running too hot in the U.K. right now.

Boiled down to its simplest terms, the conflict is that what Carney is suggesting would lead to a “loose” fiscal policy (printing lots of cash and keeping interest rates low) until economic growth returned to something along normal lines. That goes against the austerity-minded British government, whose conservative approach to fiscal policy means it’s mostly interested in keeping down inflation and not running up government deficits any further.

But that certainly doesn’t fit with the ideals of the “Liberal” Mark Carney, who seems to have a political dirt fight behind him in Canada and an ideological war ahead of him in Britain.