Outgoing Bank of England governor Sir Mervyn King is being made a peer, Downing Street confirmed.
Prime Minister David Cameron nominated the banking chief for a life peerage for his significant contribution to public service.
The announcement comes as Sir Mervyn gave his final Mansion House speech on Wednesday night.
Chancellor George Osborne, who confirmed the honour to guests at the annual event in the City of London, said that Sir Mervyn had "helped to lead our country through an extraordinary period".
He added: "More than that, you have been the original thinker who has taken Britain on the journey that began with inflation-targeting to monetary independence and now to far-reaching reforms to prudential regulation and financial oversight.
"I can think of few people who have done more to shape our public discourse in the last 30 years and you have done so with integrity, intelligence and patriotism and also with a seemingly endless supply of sporting metaphors.
"So, here we go, you had to play on a sticky wicket but you leave with our economy now emerging from the ashes."
Sir Mervyn leaves the Bank after a decade in the top job that has seen him come up against the banking crisis and a spiralling eurozone .
But his involvement with the central bank dates back far longer, with a stint as deputy governor between 1998 and 2003 preceded by his role as chief economist and post as a non-executive director.
Sir Mervyn told guests at the dinner: "I am truly honoured to have the opportunity to continue my public service in the Lords. Chancellor, I know you will be comforted and relieved that I consider the role of members of the House of Lords to be, as Keynes put it, ruthless truth-telling."