The Decision of the British government to appoint the Canadian central banker Mark Carney as the new Governor of the Bank of England , the crown jewel of central banks, is a bold decision by Chancellor George Osborne and PM David Cameron . It is a rare day indeed when Britain draws upon Canadian talent for one of the top jobs in the U.K. historically it is usually the other way around. But the financial crash and fragile recovery has changed all of that. Britain suffered severely in the aftermath of the crisis and many of its banks were either bankrupt or in serious trouble as a consequence of lax regulation, unbridled greed, incompetence, fraud and lack of sufficient regulatory oversight. Canada largely because of its long standing tradition of cautious prudence and deep distrust of the banks did not suffer the same sort of banking collapse as did Britain. Furthermore , its officials including Carney were quick to respond and tighten regulatory oversight. So Mark Carney’s reputation as a deft manager of the financial system and a top quality central banker rose along side that of Canada. Canada’s employment performance was also judge positively despite the fact that we suffered from a quite severe recession and unemployment rose to above 8 %. from 6 % in 2007. It currently sits at 7.4 %. It is higher in industrial heartland regions and places like Quebec , the Atlantic provinces and to a certain extent southern Ontario still have the feeling of being stuck in recession even though growth is positive. This is the kind of economy that Mark Carney has presided over. Carney comes from a financial markets background and as Gavin Davies suggests in his commentary on Carney’s appointment in the FT he was not regarded as a macro policy specialist or theorist so much as a financial markets specialist. It is these latter skills and talents and work experience 13 years with Goldman Sachs and his recent work on the Financial Stability group that were the basis of his attraction to the British. But Britain doesn’t just face the problem of of getting financial regulation right. It also has to deal with the very real problems and threat to economic recovery and employment posed by the problems in Europe and the contradictions of its own fiscal policy which has been strongly biased toward austerity and deflation at a time when stimulus is needed. So we shall see how Mr.Carney responds to these challenges. His appointment begins in July, 2013. By then the trends ought to be clear. In Canada Carney was a conventional monetarist who positioned himself pragmatically close to the centre of the Taylor rule monetarist consensus adopting an inflation target of 2 %. Actual inflation according to the most recent data has been running below that and there are signs of the Canadian economy slowing down. So despite his constant warnings of increasing interest rates in practice he kept the rate close to or at 1 % once he realized that rate reductions were required to prevent an even greater recession. The challenge in Britain is whether Carney will understand the potential great danger of combining excessive fiscal orthodoxy with monetary tightening and act appropriately, despite strong voices urging anti-inflationary orthodoxy. We shall see soon enough.