Before the recession, central bankers were seldom seen and rarely heard.
But now they are taken on by governments to sort out the economic mess.
Canadian central banker Mark Carney was backed by George Osborne as the new Governor of the Bank of England — but problems have arisen since he said market interest rates were rising quickly. The claim has knocked the pound back against the dollar, the euro and other currencies.
Britain is not the only nation going through the central bank transition. President Barack Obama expects Federal Reserve chairman Ben Bernanke, credited with having steered the United States through the worst financial crisis since the 1930s, to step down next year as his term ends.
Replacement candidates include former Treasury Secretary Lawrence Summers and retired governor of the Bank of Israel, Stanley Fischer, a former deputy managing director of the International Monetary Fund.
The biggest issue for central bankers, including Fischer’s successor Jacob Frenkel, is how to tackle the aftermath of the financial crisis.
Israel avoided the banking calamity, but Frenkel must stabilise property prices and promote growth.
This is the issue facing most central bankers. Bernanke wishes to start “tapering” levels of quantitative easing from the current $80 billion a month.
Indications suggest that Carney does not think the British economy is ready to have the twin stimuli of 0.5 per cent official bank rate and quantitative easing withdrawn.
Recovery is now happening with the IMF among those to set to sharply upgrade the UK’s growth prospect for this year from 0.6 per cent to 0.9 per cent. Some City economists believe that 2 per cent growth is possible.
If true, then Carney’s task, like that of Bernanke and Frenkel, is to tame what John Maynard Keynes called the “animal spirits” — the wilder instincts of consumers and investors.
That will be no easy task.
