When Bank of Canada governor Stephen Poloz promoted Carolyn Wilkins to be his number two in 2014, he praised her as a “jack of all trades”.
Now Ms Wilkins, the bank’s senior deputy governor, has emerged as the frontrunner to replace Mr Poloz when he leaves the top job next year, in an appointment that would signal continuity while emphasising a focus on emerging challenges such as climate change and the digitisation of currency.
“If she wants the job, she will be the candidate to beat,” said Craig Wright, chief economist for Royal Bank of Canada.
Mr Poloz said in December that he would step down when his seven-year term ends in June, having steered Canada’s economy through a rocky recovery from the Great Recession, which included a punishing collapse in commodity prices, a downturn in the housing market and dangerously elevated levels of household debt.
Whoever gets the job “will have a good place to start from”, said Stephen Gordon, a professor of economics at Université Laval. Unlike many developed economies, inflation in Canada is at the central bank’s 2 per cent target.
The BoC has been the outlier over the past year by holding rates steady even as other major central banks cut, including the Federal Reserve and the European Central Bank. “The challenge will be dealing with what comes next,” said Mr Gordon.
Fortunately for Ms Wilkins, 55, Mr Poloz has done much to prepare her for the top job.
He took the administrative duties once carried out by senior deputy governors and created a new chief operating officer position, freeing her to oversee strategic planning and the bank’s economic and financial research.
Ms Wilkins has also been a fixture at press conferences with Mr Poloz and appeared alongside him in testimony to parliament, as the governor concentrated on improving communication with the public and markets about policy decisions.
Ms Wilkins has earned a reputation as an “effective communicator”, said Frances Donald, chief economist at Manulife Financial. “Like Poloz, Wilkins has found a balance between being able to speak to the markets but also being a central banker for everyday households and businesses.”
A special committee of the Bank’s board of directors has begun the search process, with the aim of finding a candidate by the spring. Even before Mr Poloz’s announcement, Ms Wilkins’ name featured prominently in discussions about his successor, and economists surveyed by Reuters saw her as the odds-on favourite for the role.
Bill Morneau, Canada’s finance minister, and prime minister Justin Trudeau will have the final say, with the new governor starting a seven-year term on June 3.
Ms Wilkins is the first woman to serve as senior deputy at the Bank of Canada, and by extension the only woman to ever have her signature on Canadian banknotes. If selected, she would also be the BoC’s first female governor.
That would fit with Mr Trudeau’s emphasis on gender equality, which led to the appointment of an equal numbers of men and women to his cabinet.
Picking Ms Wilkins, however, would buck the government’s quarter-century record of recruiting governors from outside the central bank’s ranks.
When the former BoC governor Mark Carney stepped down in 2013, senior deputy Tiff Macklem was seen as a frontrunner to replace him. But the job instead went to Mr Poloz, then head of Canada’s federal export credit agency.
Now Mr Macklem’s name is again among those that have also been circulated in connection with the role, if the government does decide to look outside the central bank for its next leader. Since 2014 he has served as the dean of the University of Toronto’s Rotman School of Management.
Other names floated include Jean Boivin, a managing director at investment group BlackRock, and Paul Rochon, Canada’s deputy minister of finance.
Beyond the solid base established by Mr Poloz, the next governor faces an extended period of sluggish growth, heightened by Canada’s exposure to global trade tensions, the effect of low commodity prices on resource-producing provinces and — after back-to-back months of job losses at the end of 2019 — an uncertain outlook for heavily indebted consumers.
There are also a new set of challenges, as monetary policy seeks to adapt to issues such as climate change and cryptocurrencies — issues Ms Wilkins has taken the lead on during her time at the Bank of Canada, Ms Donald said.
“What Canada and what the global economy needs from central bankers are not traditionalists who are going to think about the world in the same way we did over the past 20 years, but those who are going to recognise how the problems of the future should affect monetary policy,” said Ms Donald. “More than a traditionalist we need a futurist.”