the Reserve Bank loses its heir apparent to Fortescue’s Green Fund

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The Reserve Bank of Australia was rocked today by the resignation of its Lieutenant Governor Guy Debelle, who is only leaving six days in advance.

dr Debelle said he was stepping down to become Andrew Forrest’s chief financial officer Fortescue Future Industriesa company investing in zero-emission technologies such as green hydrogen.

The move came as a surprise given Guy Debelle, as deputy, has long been seen as the heir apparent to Reserve Bank Governor Philip Lowe, whose term expires in September next year.

Just last year, Dr. Debelle reappointed as deputy.

Debelle was one of the brightest sparks, if not the best brightest spark at the bank.

He led the day-to-day response to the global financial crisis when he headed the bank’s financial markets group and the economic response to the COVID crisis as deputy governor.

He is recognized worldwide, from the halls of the Massachusetts Institute of Technology, where he was a visiting professor, to the world of central banking, where he chaired several international committees.

What made Guy leave?

Then why did Debelle jump off the ship? As deputy governor, he has shown keen interest in the transition to a net-zero economy and has given several speeches on how this move will affect Australia economy and be financial system.

But as recently as the last month he seemed still hoping to get the keys to the Reserve Bank’s vault at Martin Place in Sydney, testify told Parliament that he had no financial assets to minimize perceived conflicts of interest.

But his interest in the zero-emission transition notwithstanding, his decision to leave the country appears to have been partly because his status as governor-on-hold was no longer secure.

A drama called Succession

The Reserve Bank has been criticized for this missed its inflation target five years in a row and for “groupthink’ – an unwillingness to pay attention to someone else’s ideas.

No matter who wins the next federal election, both sides of politics have promised an investigation into the bank to look into why they made such an obvious mistake and what needs to be changed to ensure it doesn’t happen again.

Given his apparent failure, it’s possible that the Treasury Department and its political masters felt that another internal appointment would be inappropriate and that the next governor should be appointed from outside to shake things up.



Read more: RBA Governor Philip Lowe’s dangerous interest game


Guy Debelle may also have seen gender diversity written on the wall.

The bank has not had a female governor in 100 or more years since it printed its first banknote.

In contrast, the High Court of Australia appointed its first female judge in 1987, South Australia appointed its first female governor in 1991 and Victoria appointed its first female police commissioner in 2001.

While the RBA made one concerted effort In recent years, to encourage greater diversity within its workforce, it has remained male, pale and frumpy in comparison to the rest of Australia – particularly at the senior levels.


Proportion of women in the workforce

Percentage of total as of June 30, RBA versus Australian workforce.
Reserve Bank of Australia

In this respect, the Reserve Bank is lagging behind. The appointment of Guy Debelle 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 Deputy Governors. The two are most likely Dr. Luci Ellis and Dr. Chris Kent, who jointly oversee the Bank’s monthly policy process as heads of the Economic and Financial Markets groups respectively.

RBA Deputy Governor Luci Ellis.
Mick Tsikas/AAP

Alternatively, Frydenberg may choose to inject some new blood before the post-election review.

Impressive economists like Dr. David Gruen, current head of the Bureau of Statistics, and Jenny Wilkinson, current head of the Treasury Department’s fiscal group, would be in position to get started.

Everyone has worked at the Reserve Bank and everyone has an outside perspective.

Deputy Treasury Secretary Jenny Wilsonson.
Mick Tsikas/AAP

What is clear is that an orderly coronation was thrown in the trash.

With a review on the horizon and a change in government likely, becoming deputy governor could well be a poisoned chalice — an impossible task with little time to learn on the job.

The only certainty at the bank is turbulent times.

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