The BoE has not lost to the Treasury The swagger is back at the Treasury. For many, Mark Carney's appointment as the next governor of the Bank of England looks like a power grab by the mandarins of One Horse Guards Parade. The new, unexpected and (lest we forget) Canadian leader will certainly change the relationship between the two great economic institutions. But perhaps not in the way that George Osborne imagines. Each of the "favourites" for the governorship had their particular merits and flaws. But what all of them had in common was that they were known to the BoE: in different ways, they were all insiders. The BoE would have got someone it knew and liked, albeit to different extents. Life would have gone on without abrupt change. Instead, the Treasury played an ace - and kept it brilliantly hidden right to the last. Here, then, was the Treasury's revenge for years of having to play second fiddle to the BoE. Revenge for having its power gradually eroded over the years, as it first lost control of monetary policy to the BoE and then a large amount of discretion in macroeconomic and fiscal policy with the coming of the Office for Budget Responsibility. It is unwise to underestimate how important thoughts of power and position are to the Treasury. In my experience, the BoE was often seen less as an ally than as a rival - and increasingly the more powerful player. In the eyes of the Treasury, the BoE does not understand that ministers have to answer to voters about the economy. By contrast, the BoE governor can use fancy language, appeal to the complexity of the issues and never has to face the electorate. Worse, because the financial markets follow the work of the governor so closely, interpreting his every word and wink, he has a de facto veto on Treasury policy. In my time working there, and on economic policy in Downing Street, you had to think very hard before doing something that the governor might want to criticise - let alone attack BoE policy. So if his approach to supporting banks led him down one road, you had more or less to go along with it. And if he did not want to move in certain ways on quantitative easing, for example, then you were stymied. So there are plenty of reasons for the Treasury to want to rebalance the relationship with the BoE. But if this was a motivation for the appointment, I believe it will backfire. The Treasury has got itself a new governor who could be very awkward to deal with. Not because of his views or his personality - though his ice hockey playing suggests he will not shy away from conflict - but because of the situation he finds himself in. A situation created by the Treasury. The new governor has far more institutional power than his predecessor. In addition to control of monetary policy, he will be the key figure in financial regulation, both in the UK and on behalf of the government within the EU and G20. Seeing Sir Mervyn King off might have been hard - seeing Mr Carney off will probably be impossible. And as an outsider, Mr Carney is far less likely than, say, Paul Tucker to pay much attention to the subtle and informal rules of the British political game. He has UK connections but he is not immersed in an understanding of how our unwritten constitution works and when you might have overstepped some invisible line. Nudge and tea is far less likely to work on him. Mr Carney is only doing the job for five years and cannot be reappointed, so he has no need to court favour at the hands of the chancellor to secure a second term. He can do what he thinks is right without worrying even a little about what the Treasury hierarchy thinks. Mr Carney seems to be a very talented man with a wide range of relevant experience. He is not just a slightly pointy-headed economist or just a banker. A fine match for the Treasury! But it remains to be seen whether the skills that helped him get Canada through difficult times will suit the UK's problems and our different institutional set-up. I suspect the balance between the two great economic institutions has shifted as a result of Mr Carney's appointment. But contrary to popular belief, this is not likely to be in the Treasury's favour. It will be up to the Canadian to show that this is a good thing for Britain. The writer, the chief executive of New Philanthropy Capital, is a former Treasury and Downing Street adviser