The appointment of Andrew Bailey as governor of the Bank of England is a safety-first move. The central banker knows his way around the City and it is reasonable to assume that he can stand up for the finance sector in the coming years of tough negotiations with Brussels. Mr Bailey has made a point of saying that Britain, home to Europe’s largest financial centre, must not become a “taker” of EU rules after it leaves the bloc. Tellingly, he is viewed by former Treasury chiefs as “one of us”. But is this enough, given the age we live in? The last three Bank of England governors have been big figures on the international stage, with the incumbent, Mark Carney, being a central banker whose words move markets. Mr Bailey, for all that he is an insider’s insider, is not in the same mould. Britain ducked its chance to hire such a transformational figure, which is strange given what lies ahead. We are all born with imperfect foresight, but there are three dangers to the country’s economy clearly visible on the horizon: Brexit, climate change and the next recession. We know next to nothing about Mr Bailey’s thoughts on how to deal with these.

Since 2016 Mr Bailey has run the City watchdog, the Financial Conduct Authority. While his predecessor fined banks billions of dollars for trying to rig interest-rate benchmarks and foreign exchange markets, Mr Bailey took a softly-softly approach to the City. A key review into banking culture seen as core to restoring trust in banks disappeared with this new outlook. Earlier this month, a representative of victims of a City mini-bond scandal walked out of a meeting with Mr Bailey, accusing the FCA of not holding to account the financial firms it regulates under his stewardship. Whistleblowers say he failed to investigate alleged wrongdoing in high-street banks. He also was criticised by MPs for allowing banks “to continue to rip people off” when the regulator’s review of high-cost credit fell short of capping onerous rates. The view is that he backed the City over the consumer.

Being governor of the Bank is no easy task; it requires both genuine insight of market operations as well as a political sense of where the Treasury is going. Though nominally independent, the Bank and No 11 work hand in glove on a daily basis. Mr Bailey was part of the Bank’s inner circle in the summer of 2007 when it “had not identified any looming gaps” in its assessment of risks to financial stability. Three months later Northern Rock approached the Bank for a “liquidity support facility”, and the financial crisis in the UK began. Mr Bailey will not want to miss the next crisis.

Brexit is likely to strip away the mystery from central banking. The harder the departure from the EU, the more likely that the economy will need a stimulus. The Bank has little room to cut rates much more. Instead the Treasury will almost certainly have to step up and spend. The consensus of many economists is that a hard Brexit will require higher levels of spending, deficits and debt. If Britain departs the EU with a “bare bones” deal with Brussels, then we should also leave behind the “sound finance” view of the Treasury, which argues that balanced budgets and low government expenditure are required for business confidence. This is an ideological position that ought to be jettisoned. Government borrowing so far stands at £51bn, up £5bn on the same figure last year. A recession, Brexit and climate change will need greater government spending and a framework to handle it.

This is Mr Bailey’s challenge for the next eight years. He needs to leave behind orthodox thinking. That means understanding that a central bank can do more than set interest rates to achieve an inflation target. It can purchase significant levels of government debt and “monetise” the government’s deficit. The Treasury views this as “unsound” because it would fuel inflation. Yet the Bank of England has spent £435bn in a not dissimilar way since 2009 and inflation is flat. Central banking is in danger of becoming a failed paradigm that needs replacing. The question for Mr Bailey is whether he understands that the old way of doing things has become unrealistic and misleading. The answer he gives will be important for his profession – and the country.