2

The Monetary Cosmopolitans

NEWTON, MASSACHUSETTS – Can you imagine a French citizen being elected President of the United States? Or a Japanese prime minister of the United Kingdom? Or a Mexican chancellor of Germany? Probably not. Indeed, even if there were no legal obstacles, it would be difficult to imagine voters in a democracy installing a foreigner in their government’s top job.

But, during the last few years, countries have increasingly turned to foreigners and people with considerable foreign experience to assume what is generally viewed as a country’s second most important position: head of the central bank. What has driven this shift, and should it be welcomed or discouraged?

For example, Stanley Fischer, nominated in January by US President Barack Obama to succeed Janet Yellen as Vice Chair of the Federal Reserve, is an American immigrant from southern Africa who served as Governor of the Bank of Israel from 2005 until last year. And, in July 2013, Mark Carney, a Canadian who had served as central-bank governor in his home country, became the first foreigner to lead the Bank of England in its nearly 320-year history.

Similarly, the widely respected governor of Ireland’s central bank, Patrick Honohan, spent nearly a decade at the World Bank in Washington, DC. One of Honohan’s deputies is a Swede with experience at the Hong Kong Monetary Authority; the other is a Frenchman.