Finance Minister Jim Flaherty reached into his own department Thursday to appoint Mark Carney as the next governor of the Bank of Canada.

Carney, 42, is currently senior associate deputy minister of finance. Before that posting, he was a deputy governor of the Bank of Canada. He has also served as Canada's finance deputy at the G7.

Mark Carney, left, at the time a deputy governor of the Bank of Canada, chats with U.S. Federal Reserve chairman Alan Greenspan at a meeting of Group of Seven central bankers and finance ministers, Feb. 6, 2004, in Boca Raton, Fla.
(Associated Press/David Adame)

Carney will join the Bank of Canada on Nov. 1 as adviser to the governor, a position he will occupy until he assumes the governor's role on Feb. 1, 2008.

His appointment comes as a surprise. Most analysts had expected that Paul Jenkins, the Bank of Canada's senior deputy governor, would get the job.

Flaherty said his adviser would do well in his new job. "We're confident he will provide a steady hand to help maintain the stability of Canada's monetary system," Flaherty said at a news conference. 

Carney will succeed David Dodge, who has overseen Canada's monetary policy since 2000. Dodge indicated in April that he would not seek a second term as the head of the bank.

A native of Fort Smith, N.W.T., Carney received a bachelor's degree in economics from Harvard University in 1988. He received a master's degree in economics in 1993 and a doctorate in economics in 1995, both from Oxford University.

He worked at Goldman Sachs for 13 years, rising to the post of managing director.

Carney told reporters he believes he brings policy experience, academic training and varied private sector experience to his new job.

He told a news conference he would maintain the bank's inflation-fighting focus. 

"The fundamental priority is to achieve the core objective of the bank, which is low, stable, predictable inflation — under the auspices of the current accord, two per cent, at the centre of the band," he said.

Analysts said his experience in capital markets will prove of great benefit in his new job, given the strong Canadian dollar, its effect on manufacturing and the liquidity crisis that has rattled the markets recently.

"We need someone of his experience to be able to help ... guide us through this maze," said Kathryn Del Greco, senior investment advisor at TD Waterhouse.  

"I think it will be a very good fit for Canada."

Most recently, Carney played a major role in helping financial institutions deal with fallout from the credit crunch.