The Financial Stability Board was established at the G20 summit in 2009, when leaders were faced with the reality that a full blown financial crisis was well underway. It was the first substantive achievement of the group, which had been clamouring to replace the smaller, time - worn G7  as the world’s economic overlord from the time Paul Martin started calling  together his fellow finance ministers a decade earlier. Further, the existing international regulatory bodies, notably but not exclusively the Financial Stability Forum, were structurally unable to deal with a major crisis.

At next week’s G20 summit leaders are expected to announce their choice of a new chairman for the FSB, which has been baby-sat in its infancy briefly by an American, followed by an Italian central banker. To date the FSB world has unfolded in the time honoured tradition of the Americans and the Europeans running almost everything economic, and furthermore has done little of importance. Yet it does have the capacity to play a significant role in guiding the international financial community through stormy weather: it has broader membership than the FSF, including those emerging countries with significant financial institutions. (China has three of the top five banks in the world as measured by market cap; Hong Kong and Singapore are major financial centres, India and Brazil are financially sophisticated.)  It also includes policy makers in its governance structure, so it has more political clout.

What it needs to fulfill its promise is strong leadership, and while there is an ample number of capable financial leaders in the so-called BRIC countries, the G20 may well, this time, turn to a Canadian to give shape and substance to the regulatory body it founded. Bank of Canada governor Mark Carney is seen as likely to get the nod.  He has earned the right: first by steering Canada’s own monetary policy with insight and deftness; second by showing he has the intellectual and moral courage to stand up to the world’s senior commercial bankers. Because his experience is in both the public and private sectors, his opinions have the ring of truth.

His appointment will depend in part on whether G20 heads of government genuinely want a real leader, or whether they will adhere to the old ways of keeping international regulation as weak as possible. Regulatory reform is unlikely to be top of mind at this summit – US economic weakness and the Eurocrisis are likely to suck up most of the intellectual energy – but the appointment is seen by most leaders, especially those whose economies get sideswiped by crises in the West, as an important one.

Two caveats: Prime Minister Harper and Finance Minister Flaherty have been publicly vocal – rightly so, in my view – on what needs to be done to resolve the debt crisis in Europe, and Europeans may take this as offensive from upstart Canada, no matter how good its comparative economic record. Second, apparently there is a sleeper for the position in the form of a Swiss banker, and the capacity of the Europeans to support one of their own should never be underestimated.