Finance Minister Chrystia Freeland appointed Carolyn Rogers, a Canadian who has been climbing the ranks of international banking regulation, as senior deputy governor of the Bank of Canada.
Rogers, currently in the middle of a three-year term as secretary general of the Basel Committee on Banking Supervision, will replace Carolyn Wilkins, who left the central bank in December after narrowly losing out to Tiff Macklem in the competition to become governor.
Macklem will welcome the help. He has been left to do two jobs for an unusually long period of time during one of the most extraordinary periods in the central bank’s history. Eight months have passed since Wilkins advanced her departure date to match the end of the 2020 calendar year, and it will be another five months before Rogers actually joins the Bank of Canada on a day-to-day basis.
“Her domestic and international experience will bring a diverse perspective to the bank,” Macklem said in a press release. “She is also a strong senior leader and strategic thinker — invaluable skills as the bank charts an ambitious path to best serve Canadians.”
The delay says something about the ability of Prime Minister Justin Trudeau’s government to get things done. After Macklem in December 2013 said that he intended to resign as senior deputy governor the following spring to lead the Rotman School of Management, the Bank of Canada’s board of directors and former prime minister Stephen Harper’s cabinet had settled on a replacement (Wilkins) by April.
Managing the pandemic is distracting, to be sure, but a routine appointment of a senior official should have been straightforward. The dithering put unnecessary strain on an institution that’s on the frontlines of the fight to turn back the COVID-19 recession.
It also undermined Macklem’s credibility. He was left to preach the importance of diversity in decision-making while leading an all-white, all-male policy committee. That group of five includes three graduates of the same school, Western University in London, Ont. No other major central bank is currently so monochromatic.
“Canadians need to see themselves in the Bank of Canada,” Macklem said during testimony at the Senate banking committee last month. “We have some work to do at the senior-most levels, in particular.”
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Rogers, who previously worked in leadership positions at the Office of the Superintendent of Financial Institutions and British Columbia’s Financial Institutions Commission, brings a deeper understanding of finance than Bank of Canada’s current set of leaders, whose experience is in economics. That will be valuable, since periods of low interest rates inevitably increase the threat of financial crises. Macklem has already flagged the housing market as a potential source of worry.
“Ms. Rogers brings a tremendous wealth of expertise and experience with her that will serve Canadians well as we navigate the end of the pandemic and build a strong economic recovery,” Freeland said in a press release. “I am confident that, in addition to her exceptional resumé, Ms. Rogers will bring a fresh perspective to the Bank of Canada.”
The central bank will have to wait to benefit from that fresh perspective. Rogers’ start date is Dec. 15, a week after the Bank of Canada’s final scheduled interest-rate decision of the year. Unless other staffing changes are made, that means the first year of post-pandemic monetary policy will have been guided entirely by a small group of white men of similar age and experience.
“While diversity is a fact, inclusion is an act,” Macklem said in a speech in May. “Economic research has already settled the question of whether diversity and inclusion bring benefits. We know they do,” he added. “Diverse and inclusive groups make better decisions. That’s because they can avoid the groupthink that happens when decision-makers all have similar backgrounds and approach problems in the same way.”
To be sure, recruiters in search of non-white, non-male economists with enough experience to credibly serve in a leadership role at a central bank have their work cut out. The profession is a male bastion that has bestowed its top honour, the Nobel Prize in Economic Sciences, to only two women (Elinor Ostrom in 2009 and Esther Duflo in 2019) since it was first awarded in 1969.
Women only represent about 25 per cent of permanent employees in Canadian academic departments, according to the Canadian Women Economists Committee. That matters because the Bank of Canada might actually be able to compete with a university when it comes to pay. A mid-career woman who is making a name for herself on Bay Street or Wall Street is probably out of reach. The senior deputy governor is paid about $350,000 per year, a decent salary, but one that someone of Macklem’s or Rogers’ stature could match by joining a couple of corporate boards.
Wilkins, who was appointed to Intact Financial Corp.’s board of directors earlier this year, will earn at least $210,000 for a job that requires a fraction of the time and effort she devoted to managing the Bank of Canada’s response to the COVID-19 crisis. Claude Dussault, the chair of the Intact board, made more than $460,000 last year in that role, according to public filings. Those are the kinds of numbers against which the public sector must compete. A commitment to diversity might require a willingness to pay people what they’re worth on the open market.
The structural barriers to pulling together a diverse leadership group suggests that Freeland and the Bank of Canada’s board of directors need to be more creative. The central bank’s senior staff is fairly diverse, so policy discussions could be improved by increasing the number of deputies on Governing Council and promoting from within.
The Bank of Canada also could loosen up and expand its policy discussions to include outsiders, which is what the Bank of England does to enrich its debates over interest rates and financial regulation.
In the time that it took Freeland, the first woman to serve as Canada’s finance minister, to appoint a woman at the Bank of Canada, her British counterpart, Rishi Sunak, added two: Wilkins, who was named to the Bank of England’s financial stability committee, and former Citigroup Inc. economist Catherine Mann, who joined the Monetary Policy Committee. Both Wilkins and Mann were appointed as external members.
“The Treasury is committed to appointing a diverse range of people to public appointments, including at the Bank of England,” the British government said in announcing that Mann would be helping to set policy. “The Treasury continues to take active steps to attract the broadest range of suitable applicants for posts.”
It can be done. The people in charge of hiring just need to be willing to try.
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