Bank of England Governor: Mark Carney is the Perfect Choice to Defend The City

George Osborne went for the insider in appointing the next Bank of England Governor, just not one working in Threadneedle Street.

In choosing Bank of Canada Governor Mark Carney as the first non-native to run the central bank in its 320-year history, Osborne has ensured that Britain stays at the forefront of global financial market regulation. He also has an effective and potentially game-changing counterweight to European banking reform and a man certain to keep Britain's financial services industry at the centre of its economic recovery.

"He quite simply is the best and most experienced person in the world to be the next governor to the Bank of England," the chancellor said today in the House of Commons. "Mr Carney will bring the fresh perspective needed."

He'll also bring one of the few remaining untarnished reputations in global financial markets to the city - and a City - that's sorely lacking in moral leadership.

What's more important to Osborne, however, are surely the sterling international connections that Carney, 47, brings to Threadneedle Street.

His chairmanship of the Financial Stability Board and his directorship at the Bank for International Settlements (the "central bank for central banks") means Britain has perhaps one of the most influential and respected men advocating for it during what could be the biggest round of legislative and regulatory changes the industry has ever known.

At the same time, Britain also gets perhaps the ideal candidate to offer a persuasive challenge to the European Union's plans to establish a single banking regulator that would - in concept - oversee financial services for all member states.

Having former Governor Mervyn King or his Deputy Paul Tucker argue for City of London exceptionalism when both were - fairly or not - tainted with the worst excesses of "light touch" regulation was simply not the most effective strategy for a nation who's economic and political fortunes are inexorably tied to the banking industry.

Carney's role as head of the Bank of Canada during the worst of the financial crisis - when not a single bank received state aid nor was implicated in any of the myriad financial market scandals - makes him an almost unimpeachable representative of the UK's interest in EU negotiations.

He's also a former investment banker - having toiled, as many in global public policy have - for Goldman Sachs over 13 years in three different financial centres. He knows the markets - and not as an academic.

He's trusted by the major players as a no-nonsense financial professional who muddied his boots in the same trenches, not someone who lectures them on morality from the safe distance of observation.

He's also famously unafraid of their judgement, having withstood a furious tirade last year over proposed banking reforms from pugnacious JP Morgan CEO Jamie Dimon, only to receive an apology for the outburst some days later.

All that being said, it's hard to make the case for Carney's stewardship of the economy, one of the principal tasks of any bank governor.

He's left behind the largest pile of Canadian personal debt on record and the brewing ingredients of a housing bubble some say could pop at any moment. He's been criticised for trying to use bank rhetoric to anchor inflation expectations but failing to use interest rate hikes for fear of inflating the Loonie and blunting the international competitiveness of Canadian exports.

Canada's pristine record for financial market probity, as well, owes much more to the protective instincts of both the Federal government and the province of Ontario, home to the city of Toronto and the country's biggest banks, than to any form of central bank prescience.

Replicating his success in Britain seems unlikely.

Canada's financial services industry is tiny and far more narrowly focused when compared to the global casino of the Square Mile.

Its economic insularity during the financial crisis owes more to the soaring value of commodities and the spillover from the billions in US stimulus spending than to any particular policy decision from Ottawa.

Even today, Canada benefits for having its biggest trading partner - the United States - growing at a 2 percent clip as opposed to Britain's closest export destination, the EU, which is sinking into recession.

There are other issues, as well. Having manifestly ruled himself out of the running for the Bank of England job in August - using words like "no" and "never" - Carney promptly submitted his application only weeks later. Many will wonder how, or if, the reportedly enhanced deal that will pay him more than £620,000 a year - much more than what his predecessor earned - influenced his change of heart.

Others will question the need for yet another Goldman Sachs alumni in a top policy role after the appointment of one of the bank's former international vice presidents, Mario Draghi, as head of the European Central Bank.

In the end, however, it's a good call by the Chancellor - and certainly a resoundingly better decision than the appointment of King's hapless Deputy. It may not do much for morale on Threadneedle Street - you'd have to think Tucker will soon follow his boss out the door - and may create some tension among the global central banking community over talent poaching.

But Carney's appointment underscores the rarely-spoken truth about Britain's financial future: without a strong, confident and well-managed City, it's simply too bleak to contemplate.

The Bank of Canada governor is the best choice available to ensure that's something we don't have to consider.