Top women are now leading the world of high finance
Israeli's woman on top: Karnit Flug
The departure of Angela Ahrendts from Burberry and Marjorie Scardino from Pearson has left Britain’s FTSE100 boardrooms woefully short of women chief executives.
But in the world of high finance, it is becoming a very different story.
At the Bank of England one of the first moves of Canadian-born Governor Mark Carney was to bring in Charlotte Hogg as first chief executive officer. She has swiftly moved to bring in consultants McKinsey and Deloitte with a view to shaking up what many regard rather a fusty and unreformed organisation.
Even more impressive is the choice of economist Janet Yellen, currently vice chair of the Federal Reserve System, to take over as chairman in 2014. Yellen will follow in the footsteps of Ben Bernanke, who guided the United States and global economy through the 2008 financial crisis, and his illustrious predecessor Alan Greenspan.
Brooklyn-born Yellen has economics coursing through her family tree. The Jewish professor is married to Nobel prize winning economist George Akerlof and her son, Dr Robert Akerlof, is an associate economics professor at the University of Warwick.
As incoming Federal Reserve chairman, Yellen arguably has the most important policy-making role in the US, after the President Barack Obama.
In her new role, she is likely to lead the so called “tapering” process under which the US will run down its current bond buying — or quantitative easing programme — that is now running at $85 billion a month.
The potential removal of this stimulus to the global economy already has caused disruption in emerging markets, including Brazil, where the concern is that the end of the quantitative easing programme will sever the supply of American investment.
Yellen came to the position after Obama’s initial favourite Lawrence Summers, a nephew of Nobel Prize winning economist Paul Samuelson, pulled out of the race in the face of opposition on Capitol Hill.
One of Yellen’s main claims to the position was that she was among the few of the Federal Reserve governors to warn of the impending crisis in the US housing market and sub-prime mortgages ahead of the Great Panic. At the time her advice was ignored.
Yellen may not be the lone women at the top of the Federal Reserve. President Obama is reportedly ready to nominate Lael Brainard, currently a highly regarded member of his economic team, to join the Federal Reserve as a governor. As undersecretary of the Treasury for international affairs, Brainard is well known in global economic circles and would add some international lustre to Yellen’s expertise in the domestic economy.
She grew up as an US expatriate in Poland and Germany before the fall of the Berlin before earning her PhD in economics at Harvard and working in the Clinton White House.
A changing of the guard in central banking is also underway in Israel.
The nation has earned a reputation in recent times for seeking to recruit the best and the brightest from the diaspora as its central bankers. It largely succeeded with the choice of such luminaries as the late Michael Bruno, an Israeli former chief economist at the World Bank and American-Israeli Stanley Fischer, the former deputy managing director of the International Monetary Fund and one of the world’s most respected experts on fiscal and budget policy.
Filling Fischer’s shoes was always going to be difficult. Prime Minister Benjamin Netanyahu’s government approached Lawrence Summers but he declined the role. It then turned back to Jacob Frenkel, a former IMF chief economist, who headed the Bank of Israel in the 1990s. Frenkel withdrew his name after he was caught up in an alleged shoplifting incident in Hong Kong.
Though she was not first choice, Karnit Flug, the first woman to hold the post, who was appointed as governor of the Bank of Israel. She had been acting governor since Fischer stepped down in June 2013.
Born in Poland and raised in Israel, Flug earned her PhD at Columbia University before going on to work as an economist at the Inter-American Development Bank in Washington.
She brings over international experience and a reputation as a formidable economist.
Amid Israel’s fragmented politics the governors of the Bank of Israel have been seen as a bulwark of independence standing above politics making the difficult decisions on interest rates and monetary policy.
Flug joins an exclusive club of women central bankers who after paths strewn with obstacles eventually made it to the top job.
Alex Brummer is City Editor of the Daily Mail