Next BoE Governor Mark Carney Warns Of Repeat Of 2007 Credit Crisis

Modified: Sunday, 27 January 2013 14:59 BST - Written by David Woodsmith

STORY LINK Next BoE Governor Mark Carney Warns Of Repeat Of 2007 Credit Crisis

After a tumultuous week, which culminated in a depressingly poor set of Q4 GDP data, the weekend market shut-down provided little in the way of respite for the Pound Sterling.

Current Bank of Canada Governor Mark Carney, who will take over the head job at the Bank of England in the middle part of this year, used his key-note speech at the Davos economic forum to issue a dire warning to the world’s banking sector. Carney stated that unless workable measures are put in place, the credit crisis which began reverberating around the global economy in 2007 will be repeated. Carney described the next two years as being make or break if such an outcome is to be avoided and highlighted the key issues of ‘shadow banks’, (de facto banks acting outside current regulations) and the ‘too big to fail’ attitude which some regulators still hold towards larger retail banks, as central problems to be addressed.

Elsewhere, Friday afternoon’s session brought the release of another set of data which suggests that the giant behemoth which is the US economy is starting to show signs of life. Although December’s US New Home Sales data failed to live up to analysts’ expectations, cumulative figures for the whole of 2012, which were released at the same time, showed that transactions in America’s housing sector had reached their highest level since 2009. The figure suggests that US economic participants are beginning to regain their confidence enough to commit to ‘large ticket’ purchases once more. The release saw the Pound US Dollar exchange rate (currency : GBP USD) end the week at almost spot-on 1.5800.

Looking ahead to today’s session, highlights are likely to be provided by this morning’s German trade data and by this afternoon’s US Durable Goods figure which will provide further insight into the current mindset of US consumers.

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