Bank of England deputy governor quits after two years

A deputy governor of the Bank of England has quit after just two years in one of the most prominent central banking roles.

Dame Nemat Shafik, better known by her nickname Minouche, had a five-year contract at the Bank but resigned to become the first woman to run the London School of Economics.

The Egyptian-born economist, who is a British and US national, was appointed when the Bank was undergoing a restructuring under the then new governor, Mark Carney.

Her role overseeing banking and markets was a new one and gained importance as she oversaw a review of financial markets after the Libor rigging and foreign exchange manipulation scandals. Shafik also has a seat on the monetary policy committee, which sets interest rates, and the financial policy committee, which is charged with avoiding new crises in financial markets.

She is also responsible for the Bank’s electronic money printing exercise – quantitative easing (QE) – and on her appointment was charged with “helping to lead the design and execution of an eventual exit from quantitative easing”. Since June’s vote for Brexit, the MPC announced another £60bn of gilts will be bought to extend QE – and that announcement on 4 August was the only time Shafik voted for change to interest rates at the 25 MPC meetings she has attended. Rates were cut to 0.25%.

When she was appointed, Shafik, who also represented the Bank on international committees, was regarded as a potential candidate to succeed Carney. The governor’s term is scheduled to end in June 2018 although he has indicated he could stay longer.

Shafik is one of four deputy governors at the Bank, a structure created by Carney to adapt to powers handed to Threadneedle Street in response to the 2008 banking crisis.

She will leave the Bank in February but will not start her new role at the London School of Economics until September, after six months’ gardening leave.

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Carney said: “In her work and by her example, she leaves an important legacy. We wish her the very best for the future.”

Shafik is the second deputy governor to announce their departure this year. Andrew Bailey, who ran the regulatory arm the Prudential Regulation Authority, left to run the Financial Conduct Authority. He was replaced internally by Sam Woods. The other deputy governors are Sir Jon Cunliffe, responsible for financial stability, and Ben Broadbent who oversees monetary policy.

Shafik’s successor will be recruited by the Treasury, in the first appointment to the Bank of England overseen by the chancellor, Philip Hammond. The position is a royal appointment.

She said: “I have especially enjoyed connecting the dots and the people across the Bank’s monetary, macroprudential and microprudential policy responsibilities. Together we have stood up to every test, maintaining stability with a modern approach.”

She was formerly deputy managing director of the International Monetary Fund and has also been a permanent secretary at the Department for International Development.

She studied at the LSE, which she has described as a unique institution. “The school’s long tradition of bringing the best of social science research and teaching to bear on the problems of the day is needed now more than ever,” said Shafik.

The LSE did not disclose her pay, although her predecessor Craig Calhoun was reported to have received a £381,000 package. At the Bank, she was paid £362,000.