The Governor of the Bank of England, Mark Carney, speaks during the quarterly Inflation Report press conference in central London, February 4, 2016.POOL/Reuters
Bank of England Governor Mark Carney is facing the toughest test of his career after Britain voted to leave the European Union.
Mr. Carney, Canada's former central banker, had been outspoken in his belief that Brexit would be harmful to the British economy, angering many on the Leave side who saw it as blatant political interference.
Now, three years after becoming the first foreigner to head the Bank of England, he must stabilize the British pound and safeguard a financial system without full political support.
In typical fashion, Mr. Carney was quick to assure Britons that the central bank has a strategy in place to cope with whatever volatile markets dish up.
"Some market and economic volatility can be expected as this process unfolds," Mr. Carney said in a statement. "But we are well prepared for this. The Treasury and the Bank of England have engaged in extensive contingency planning and the Chancellor and I have been in close contact, including through the night and this morning."
He declared that the central bank "will not hesitate to take additional measures as required as those markets adjust and the U.K. economy moves forward."
To ensure that markets do not run out of liquidity, the bank is ready to pump more than £250-billion in additional capital into the financial system, he said.
But Mr. Carney's credibility is on the line. The pound plunged to its lowest level in more than 30 years and global markets swung sharply lower with the S&P/TSX Composite Index losing 200 points by midday.
"The markets take no account whatsoever of anything he says, so his reputation is not very strong," said David Blanchflower, a former Bank of England policy committee member who is currently an economics professor at Dartmouth College. "Every time he says anything, the opposite happens," he said.
While serving as Bank of Canada governor, Mr. Carney became a rising star on the global stage for his calm, adept response to 2008-09 financial crisis. After steering Canada through the Great Recession, he was plucked to serve as the chair of the Financial Stability Board, an influential and high-profile group of international regulators.
The shocking Brexit result comes as a severe blow to the 51-year-old Canadian and leaves his tenure at the Bank of England in doubt.
Steering monetary policy through the tumultuous months ahead would be hard enough with full political support. But Mr. Carney infuriated Brexit backers for what they regarded as interference over his public remarks about the economic repercussions – including a sharp drop in gross domestic product – stemming from a Leave vote.
Prime Minister David Cameron is on his way out and Chancellor of the Exchequer George Osborne, who lured Mr. Carney to Britain, may not be far behind.
As the votes were being tallied early Friday, Mr. Carney's opponents called for him to step down.
"Mark Carney should resign immediately with his head held in absolute shame from the way that he has destroyed the reputation of the Bank of England by becoming a political vehicle for the government of the day that was seeking to try and ensure that this country remained in the European Union," said Steven Woolfe, member of the European Parliament for the UK Independence Party, which had campaigned to leave the EU.
But Mr. Carney has two years left in his mandate and concerns about financial stability are likely to outweigh the rancour.
"If Remain had won, the Brexit camp would have attacked him for unduly influencing the campaign," said Peter Dixon, an economist in London with Commerzbank.
"Now that Leave has won, and his sponsor is likely to be on his way soon, Mr. Carney will have fewer friends amongst the Tories. I think he can serve his term, but would he want to go longer? Would he even be offered the prospect? The next two years won't be as comfortable as they might have been, but I think the ball is in his court."