The Reserve Bank of Australia was rocked on Thursday by the resignation of its deputy governor Guy Debelle, who is leaving with just six days notice period†
dr. Debelle said he resigned to become Andrew Forrest’s Chief Financial Officer Fortescue Future Industriesa company that invests in emission-free technologies such as green hydrogen.
The move came as a surprise, as Guy Debelle’s deputy has long been seen as the heir to Reserve Bank governor Philip Lowe, whose term ends next September.
dr. Debelle was only reappointed as deputy last year.
Debelle was one of the brightest sparks, if not the brightest spark on the couch.
He led the day-to-day response to the global financial crisis as he led the bank’s financial markets group and the economic response to the COVID crisis as deputy governor.
He is recognized around the world, from the halls of the Massachusetts Institute of Technology where he was a visiting professor, to the world of the central bank, where he chaired several international committees.
What made Guy go?
Then why did Debelle jump aboard? As deputy governor, he has shown great interest in the transition to a net-zero economy, delivering several speeches on the impact of the move on the Australian economy. economy And his Financial System†
But last month it looked like he was still hoping to get the keys to the Reserve Bank’s vault at Martin Place in Sydney, to give evidence to parliament that he did not possess any financial assets to minimize alleged conflicts of interest.
Despite his interest in the zero-emission transition, it appears his decision to leave was in part because his status as governor-in-waiting was no longer a surefire gamble.
A drama called Succession
The Reserve Bank has been criticized for failing to meet its inflation target for five years in a row and for “groupthink” – an unwillingness to pay attention to outside ideas.
Regardless of who wins the next federal election, both sides of politics have promised to investigate the bank to find out why it made such an apparent mistake and what needs to change to ensure it doesn’t happen again.
Given the apparent failure, it’s possible that the Treasury and its political leaders felt that a new internal appointment would be inappropriate and that the next governor should be appointed from outside to shake things up.
Guy Debelle may have also seen writing on the wall about gender diversity.
The bank has not had a female governor in the 100 or more years since it printed its first note.
By contrast, the Supreme Court of Australia appointed its first female judge in 1987, South Australia appointed the state’s first female governor in 1991 and Victoria the first female police commissioner in 2001.
While the RBA made one joint effort in recent years to encourage more diversity within its workforce, it remains masculine, pale and stale compared to the rest of Australia – especially at the higher levels.
Share of female workforce
In that regard, the Reserve Bank is lagging behind. Guy Debelle’s appointment as governor might have kept it there for another decade.
Who will inherit the throne?
All eyes will now be on who will be appointed deputy governor in Debelle’s place – and possibly the next Reserve Bank governor.
If treasurer Josh Frydenberg wants to maintain some degree of continuity, he might well choose one of the assistant governors. The two most likely are Dr Luci Ellis and Dr Chris Kent, who jointly oversee the bank’s monthly policy process as heads of economic and financial markets respectively.
Alternatively, Frydenberg may choose to inject some new blood prior to the post-election evaluation.
Formidable economists like Dr. David Gruen, the current head of the Bureau of Statistics, and Jenny Wilkinson, the current head of the Treasury’s tax department, could get off to a flying start.
Each has worked at the Reserve Bank and each has an outsider’s perspective.
One thing that is clear is that an orderly coronation has been thrown in the trash.
With a review on the horizon and a change in government likely, the deputy governorship may be a poisoned chalice — an impossible task with little time to learn on the job.
The only certainty at the bank is that turbulent times are coming.