The only woman to serve as senior deputy governor to Tiff Macklem just took a post at the Bank of England
Carolyn Wilkins, the first and only woman to serve as senior deputy governor of the Bank of Canada, begins a three-year stint as one of five external members of the Bank of England’s Financial Policy Committee (FPC) this week.
The outsiders serve on a part-time basis. They are there to broaden the discussion that Governor Andrew Bailey and the four Bank of England deputies on the committee would have on their own about emerging threats to the financial system and what to do about them. Bailey and his deputies are all white men of a certain age and of similar backgrounds, so the analysis can only be richer by making room for additional perspectives. The Bank of England, which also has external members on its interest-rate committee, stands a better chance of getting difficult choices right because the finance minister makes a point of bringing in people such as Wilkins to help keep the full-time central bankers honest.
What is important is having a diversity of experience, expertise and perspectives.
Bank of Canada Governor Tiff Macklem
Wilkins came a close second to Macklem in the contest to replace Stephen Poloz, the previous governor, and decided to retire from the Bank of Canada at the end of last year. They miss her. For whatever reason, Finance Minister Chrystia Freeland hasn’t named a new senior deputy, even though the position has been empty since December. But the void is bigger than an empty chair at the board table. Macklem has been clear that he sees the push for greater diversity as more than a fad. “We have all gained greater appreciation that diversity of skills, lived experience, language and ethnic background leads to better decisions,” the governor said during testimony at the Senate banking committee on June 16. “It avoids groupthink and brings new perspectives. If you can create a culture where people can bring their whole selves to work and feel they have a licence to bring their best ideas forward, you get better decisions.”
Yet the Bank of Canada’s last four policy decisions have been made by five white men, and three of them are graduates of the same university. “We need to be reflective of the diversity of Canadians,” Macklem said. “Canadians need to see themselves in the Bank of Canada. We have some work to do at the senior-most levels, in particular.
The Bank of Canada is currently the only boys club among the major central banks: the U.S. Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of England, the Swiss National Bank, and the Reserve Bank of Australia all have at least one woman contributing to interest-rate decisions. The main reason for this embarrassment is Freeland’s inexplicable dithering over an important post. (The senior deputy governor is a cabinet appointment.) But Macklem and the Bank of Canada’s board of directors could also do more. The statutory responsibility for monetary policy rests with the governor alone, and there’s nothing stopping him from soliciting advice from a wider circle. Macklem could expand the Governing Council to include more members of senior staff or follow the Bank of England’s lead by adding external members.
Macklem told Senators that the Bank of Canada has made “progress” on diversity, but acknowledged that “we need to accelerate progress.” The most obvious way to accelerate progress doesn’t appear to be on the agenda, however. Senator Diane Bellemare asked Macklem if he would consider altering the membership of the Governing Council to include more voices. Macklem answered by expressing how much he liked the central bank’s current approach to setting interest rates by achieving a consensus among the governor and the deputies.
It avoids groupthink and brings new perspectives
“I don’t think it is having full-time internal members or having some external members that counts the most,” Macklem said. “What is important is having a diversity of experience, expertise and perspectives. It is something that is important to me.”
For now, we’ll have to take the governor’s word for it, because there is little evidence that the systems in place in Ottawa are flexible enough to make the kind of change necessary to reinforce the governor’s determined words.