Friday, May 3, 2013

Canada's New Central Banker?

Barrie McKenna and Tavia Grant of the Globe and Mail report, Stephen Poloz: New Bank of Canada governor attains lifetime ambition:
It’s the job he has coveted since the early 1980s when he was a doctoral student at the University of Western Ontario.

Immersed at the time in the threats central banks face from exchange rate gyrations and global shocks, Stephen Poloz wasn’t shy about his ultimate ambition.

“As a PhD student, he always said his goal was to be the Bank of Canada governor,” said Michael Parkin, Mr. Poloz’s PhD thesis supervisor and now a professor emeritus in economics at Western.

Now Mr. Poloz, 57, president and chief executive officer of Export Development Canada since 2011, inherits many of the economic challenges that were the stuff of his PhD thesis, a high dollar and the constant threat of global shocks.

Part of what burnished Mr. Poloz’s resume in the eyes of the Conservative government was his firm guidance of the EDC through the global financial crisis. Ottawa turned to Mr. Poloz and the EDC to help flood the economy with liquidity as it lurched to halt, allowing the Crown corporation to lend to domestic companies for the first time, not just exporters. Over the next four years, EDC’s assets would to $36.2-billion in 2012 from $23-billion in 2007.

“The answer may be that the minister would like to see a governor with more experience with dealing directly with the private sector,” said economists at CIBC World Markets.

“Mr. Poloz has this experience along with a good understanding of the bank’s work given that he spent 14 years within the bank, so in many ways in the eyes of the Finance Minister he brings more to the table and is not quite the ‘outsider.’ Also, helping here is the recent federal government’s focus on trade, and the potential view that with his recent experience as the head of the EDC, he will be better positioned to provide leadership on that front,” the economists said.

Mr. Poloz eventually went to work at the Bank of Canada, but his driving ambition to become governor led him to leave the bank in the early 1990s, when he was considered a rising star.

“He couldn’t see his way to the top,” Prof. Parkin said, adding that Mr. Poloz wanted to be at the top, somewhere, so he moved on.

“I don't think his heart ever left the Bank [of Canada],” added Conference Board of Canada chief economist Glen Hodgson, who worked as Mr. Poloz’s deputy economist at EDC from 2001 to 2004.

Mr. Poloz would then spend five years in the private sector, working as editor of the Montreal-based Bank Credit Analyst. In 1999, he became chief economist at EDC, the federal Crown corporation that does export financing.

Those who know him well say Mr. Poloz, a native of Oshawa, Ont., is a highly competent manager and economist, with a passion for the global economy – a perfect fit for the job given the trade challenges that Canada faces. He’s also an avid golfer and Star Trek fan.

An EDC official, who works closely with Mr. Poloz, called him a perpetual optimist and a “glass half-full” kind of guy.

“In his heart of hearts he’s a global economist. So it’s a natural,” the executive added, characterizing him as a small-c conservative, neo-classical economist.

Doug Williamson, a leadership consultant who works with EDC’s top executives, said Mr. Poloz’s greatest strength is his pragmatism, which he suggested comes from his upbringing as the son a General Motors line worker in Oshawa.

“He’s got a common-sense approach. He’s an everyday guy,” Mr. Williamson said.

Mr. Hodgson of the Conference Board added that Mr. Poloz was “a great boss.” Speaking from Winnipeg, Mr. Hodgson said “he's a serious, creative, innovative economist.” By “innovative” he means they tried out new ideas, all with the aim of “supporting wealth creation in Canada.”

Elliot Lifson, vice-chairman of Montreal-based Peerless Clothing Inc. and an EDC director, called Mr. Poloz an economist with “street” smarts.

“Not that I’m excited about economists, but he’s an economist who knows what’s going on,” Mr. Lifson said. “He doesn’t just sit in his ivory tower.”

And unlike Tiff Macklem, 51, the bank’s senior deputy governor who spent his entire career in government, Mr. Poloz has a mix of both private and public sector experience.

“He's a good mix of someone who had time within the walls of the bank, and outside the walls,” said Sébastian Lavoie, Montreal-based economist at Laurentian Bank of Canada and former economist at the Bank of Canada.

Prof. Parkin, who supervised Mr. Poloz over the course of four or five years, describes him in quintessentially Canadian characteristics. He said he’s “very smart, a quiet-ish sort of person, not a show-off, subdued, a low-profile sort of guy, careful, clever, thoughtful – all good qualities.”

Mr. Poloz's approach to writing his PhD offers a window into his mind. His doctoral dissertation – the challenges for the conduct of monetary policy arising from exchange rates and global shocks – was “empirical, statistical, thorough and very rigorous,” Prof. Parkin said.

It was a “well-thought-out piece of work,” which didn't require many revisions, Prof. Parkin says, something he still remembers, three decades later.

And Prof. Parkin, who also knew Mr. Macklem at Western, agrees with the Conservative government that Mr. Poloz was the better candidate. “He [Poloz] would have the edge in terms of a really rigorous mind, a focused, clear-headed view of how the economy works and how to make it better,” he said.
The Bank of Canada released this statement yesterday afternoon:
The Directors of the Bank of Canada appointed under Section 9 of the Bank of Canada Act today announced that they have appointed Stephen S. Poloz as Governor of the Bank of Canada for a seven-year term, effective 3 June 2013. Mr. Poloz will succeed Mark Carney, who is leaving the Bank of Canada on 1 June 2013.

"After pursuing an exhaustive domestic and international search to find the best candidate for this important and challenging role, the Board ultimately found such an individual in Stephen Poloz,” said David Laidley, Chair of the Special Committee of the Board of Directors. "Mr. Poloz has significant knowledge of financial markets and monetary policy issues and extensive management experience. We are confident Mr. Poloz will make an outstanding contribution to the work of the Bank and uphold its reputation as a leading central bank.”

A native of Oshawa, Ontario, Mr. Poloz graduated from Queen's University in 1978 with a bachelor's degree in economics. He received a master’s degree in economics in 1979 and a PhD in economics in 1982, both from the University of Western Ontario. Mr. Poloz first joined the Bank of Canada in 1981, and occupied a range of increasingly senior positions over a fourteen year span, culminating in his appointment as Chief of the Bank’s Research Department in 1992. Mr. Poloz joined Export Development Canada in 1999 as its Chief Economist. He was appointed President and Chief Executive Officer of EDC in January 2011, a position in which he served until his appointment as Governor of the Bank of Canada.

On behalf of the directors, Mr. Laidley thanked Governor Carney for his dedicated service to the Bank and to the Canadian public during an extremely trying period for the global economy, and wished him well in his future role as Governor of the Bank of England.
What are my thoughts on Canada's new central banker? I already shared them with you in a previous comment of mine, "Oh No, Canada!?!" where I wrote the following:
...while Tiff Macklem is the name circulating as Carney's successor, I hope the Canadian government expands its search to include people like Steve Poloz, President and CEO of Export Development Canada, and former Chief of research at the Bank of Canada.

I worked with Steve at BCA Research and think highly of him on a professional and personal basis. Not sure he wants the job at this stage of his career, but he's the ideal candidate to steer our central bank in the difficult years ahead.
I stand by those words and think the Government and Directors of the Bank of Canada chose the best candidate for this demanding job. Steve is a top-notch macroeconomist who understands the global economy and financial markets extremely well. He was the managing editor of The International Bank Credit Analyst at BCA Research and produced high quality documents that were valued by clients and BCA's employees.

A friend of mine who knows him through his dealings with the EDC shared this with me: 
"Stephen Poloz is brilliant and a genuinely nice guy. And unlike academic and government economists, he has extensive experience in the private sector and project finance. In fact, he was in charge of project finance at the EDC after being their chief economist and before becoming president of the organization. This experience will serve him well at the Bank of Canada."
I agree but as smart and competent as he is, the one thing I remember most about him is his engaging and human side. In my opinion, he is the ideal boss because he knows how to engage, motivate and mentor his staff. He could be tough and demanding but he's always fair, understanding and always willing to share his valuable insights. Anyone who has worked for or with him will say the exact same thing.

On behalf of many of us who worked with him at BCA Research and many others who have had the pleasure to work with him throughout his career, I want to publicly congratulate Stephen Poloz, Canada's new central banker on this important and well deserved appointment. I'm confident he will do an outstanding job as the new Governor of the Bank of Canada.  

Below, Bill Robson, Goldy Hyder and Armine Yalnizyan discuss the surprise decision to appoint EDC head Stephen Poloz as Bank of Canada governor. No surprise to me and others who worked with him.