Bank of England: Mark Carney faces grilling over forex probe

 

Bank of England governor Mark Carney is set to face a grilling by MPs over claims that some of its officials knew about the alleged practice of foreign exchange rate-fixing.

Mr Carney is due to appear before the Treasury Select Committee just days after the Bank suspended an employee over compliance concerns following an internal probe.

His deputy Andrew Bailey has already admitted that claims linking the Bank to the burgeoning forex scandal - which regulators say threatens to match the seriousness of Libor rate-rigging - could prove "enormously damaging".

Mr Carney is due to give evidence about the allegations during a marathon three-part session which will also see him questioned over the abandonment of his flagship "forward guidance" policy on interest rates as well as Scottish independence.

The Bank was dragged into the forex affair - which is being investigated by the Financial Conduct Authority (FCA) - after a Bloomberg report centring on a meeting between officials and bank traders in 2012.

It was claimed that at the meeting, the traders admitted to the practice of sharing information about customer orders before currency benchmarks are set - an alleged practice at the heart of an ongoing regulatory probe into market manipulation.

They were said to have been told that there was no policy on these communications and that banks should make their own rules.

Mr Bailey stressed during an appearance before MPs last month that the Bank did not condone any market manipulation and that it took the claims "very seriously".

Last week, it said it had found no evidence that its staff had been involved in forex manipulation, but revealed it had suspended a member of staff while it investigated compliance with internal control processes.

It has called in law firm Travers Smith to assist with its investigation into what its officials might have known about forex rigging or information-sharing in the market.

The Bank's internal review has so far covered around 15,000 emails, 21,000 Bloomberg and Reuters chat room records and more than 40 hours of telephone call recordings.

Regulators worldwide - including the FCA in Britain - are investigating a number of firms and their foreign exchange trading activities as part of a major probe of the £3 trillion a day forex market.

They are looking into whether currency traders shared information about their positions and knowledge of client orders through instant messages to rig the foreign exchange market in their favour.

FCA chief executive Martin Wheatley told MPs earlier this year that allegations surrounding forex trading were "every bit as bad" as the Libor rate-rigging scandal, which has cost banks billions in fines.

Mr Carney's three-part evidence session before the Treasury Select Committee will begin with a section on the Bank's Inflation Report last month.

The publication of the report saw policy makers abandon the forward guidance policy linking interest rates to unemployment after just six months, as the jobless rate had improved much more quickly than previously anticipated.

Mr Carney said at the time that the economic recovery was "neither balanced nor sustainable" and that rates would have to stay well below pre-recession levels of around 5 per cent for the next few years.

Deputy governor Charlie Bean said in his latest speech that this was likely to mean rates being at 2-3 per cent "for some while".

Martin Weale, another member of the Bank's Monetary Policy Committee, has said that they are likely to rise from their current rate of 0.5 per cent - where they have been since 2009 - in spring next year.

The evidence session will also address the "economics of currency unions" amid debate over the possible implications of a Scottish vote for independence.

Chancellor George Osborne has already ruled out a currency union between an independent Scotland and the rest of the UK.

First Minister Alex Salmond's Scottish Government wants to create a "sterling zone" with the rest of the UK if there is a Yes vote in the break-away referendum.

Mr Carney said in a speech in January that an effective currency union would force a newly-independent Scotland to hand over some national sovereignty in a similar way to how this is done in the eurozone.

"Any arrangement to retain sterling in an independent Scotland would need to be negotiated between the Westminster and Scottish parliaments," he said. "The Bank of England would implement whatever monetary arrangements were put in place."

PA

PROMOTED VIDEO
News
video
Life and Style
tech
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
film
Arts and Entertainment
Up my street: The residents of the elegant Moray Place in Edinburgh's Georgian New Town
tvBBC's The Secret History of Our Streets reveals a fascinating window into Britain's past
Extras
indybest
News
Albus Dumbledore, the headmaster of Hogwarts School of Witchcraft and Wizardry has been the teaching profession's favourite teacher
education
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
sport
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sport
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Sport
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Junior Research Analyst - Recruitment Resourcer

£18000 - £20000 per annum + OTE £25K: SThree: SThree Group has been well estab...

Senior Analyst - Financial Modelling

competitive: Progressive Recruitment: This really is a fantastic chance to joi...

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform