Now that Mark Carney has decided to become the Governor of the Bank of England, the post of Governor of the Bank of Canada will be open as of June1, 2013. Many recent news stories have indicated that Tiff Macklem is the leading candidate for the position (see this, for example).
I hope he receives the appointment. Tiff was a teaching assistant for me way back in the late 1980s, and we have maintained contact off and on since then. When he was at UWO two years ago, we spent some time talking about the 2007 financial crisis, how Canada had dealt with it, and various suggestions about plans for the future.
Tiff understands the problems of
- regime uncertainty. Who knows the US gubmnt and the US Fed will do next? Well, I guess we don't have any clearer idea about what the Bank of Canada will do either, but we do expect more stability and fewer wild swings in policy.
- liquidity and shadow banks. We had a bit of talk back then about how difficult it is for central banks to follow monetary policy rules when credit expands so much via shadow banks. He will surely keep his eye on this.
Tiff will face some tough problems. The Canadian budget is in deficit, and while the budget situation in Canada is nowhere near as dicey as it is in the US, the deficit is not shrinking as much or as rapidly as people had hoped. At the same time, economic growth (outside Saskatchewan and, to some extent, Alberta) has slowed. People will be clammering for monetary stimulation. At the same time, to maintain the credible stability for which the Bank of Canada has become famous, overinflation of the money supply will not be a desireable option.
Good luck, Tiff. I hope you get the job. But it will not be nearly so smooth going as it was for Mark Carney.
[addendum: another candidate for the position might be Timothy Lane, who also received his PhD in economics from UWO]