Paul Tucker, the former deputy governor who missed out on the top job at the Bank of England after the departure of Mervyn King, is to be rewarded with a knighthood.
Sir Paul spent more than three decades at the Bank and was the favourite to succeed as governor this summer but lost out to Canadian Mark Carney.
It prompted speculation that his chances had been damaged by his entanglement in controversy surrounding the Libor rate-rigging scandal at Barclays.
He left the Bank in October to take up a senior fellowship at Harvard for the current academic year, having revealed in June that he was to quit.
The announcement in November last year by Chancellor George Osborne that the governor's job would go to Mr Carney came as a surprise after a number of commentators backed Sir Paul for the role.
He had been dragged into the controversy over the rate-rigging scandal - relating to alleged manipulation of the benchmark interbank lending rate - earlier in the year.
Former Barclays boss Bob Diamond published a record of a contentious phone-call with the deputy governor in 2008.
Sir Paul, who was grilled by MPs over the episode, fiercely denied that he had sanctioned the bank's efforts to manipulate its borrowing costs downwards.
He had joined the Bank of England in 1980 after graduating from Cambridge and in 2002 became executive director for markets, a position he held during the financial crisis.
Sir Paul became deputy governor for financial stability in 2009, later leaving before the end of his five-year term in February 2014.
He has been credited for his work putting in place safeguards to shore up the financial system against future banking collapses.
Announcing his departure earlier this year, he said: "It has been an extraordinary honour to serve at the Bank of England over the past thirty years.
"I am very proud that, through the Bank and the wider central banking community, I have been able to make a contribution to monetary and financial stability."
In a Daily Telegraph interview last October, he said of the Libor controversy: "I did absolutely nothing wrong and I don't think anyone thinks I did anything wrong."
Sir Paul said: "This is a great honour: a tribute to the people with whom I worked for many years in the pursuit of stability, without which the economy cannot flourish."