"I am delighted to announce that the next governor of the Bank of England will be Andrew Bailey...Without question, he is the right person to lead the bank as we forge a new future outside the EU," said finance minister Sajid Javid, adding that he will succeed Mark Carney on March 16.
The 60-year-old Briton, who was a BoE deputy between 2013 and 2016, will have the heavy task of conducting the country's monetary policy at the time of its exit from the European Union -- promised by new Prime Minister Boris Johnson by January 31 at the latest.
Canada-born Carney has meanwhile agreed to extend his tenure from January 31 to March 15, in order to oversee an orderly transition.
Chancellor of the Exchequer Javid added that Bailey was the "clear front runner" in the contest to succeed Carney, describing him as the "standout candidate in a competitive field" and a "leader of international standing".
He continued: "What matters is that we appoint someone who can make the right decisions.
"Andrew Bailey has the experience, the record and the character to do just that. He is without doubt the best candidate for the job." The finance regulator boss had been one of the favourites to take over, but there had also been speculation that institution could see its first female chief.
Carney, who became a British national during his time in London, steps down after six years in the job, having already extended his tenure twice before due to Brexit uncertainty.
The news comes one day after the BoE froze interest rates at 0.75 per cent before Brexit next month, but left the door open to a reduction in the event of fresh turmoil.
The Monetary Policy Committee (MPC) voted 7-2 to hold borrowing costs, in the first decision since Johnson's election triumph last week.