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HIGHLIGHTS-Bank of England's Carney faces questions about foreign exchange scandal
March 11, 2014 / 12:56 PM / 3 years ago

HIGHLIGHTS-Bank of England's Carney faces questions about foreign exchange scandal

7 Min Read

LONDON, March 11 (Reuters) - Bank of England Governor Mark Carney and other top policymakers from the central bank faced questions from the UK Treasury Committee about possible manipulation of key rates by foreign exchange traders and what the bank knew.

Below are highlights of their comments.

Governor Mark Carney:


"We have evidence now, which has warranted suspension, and the process will be seen through fairly. And if we have any additional evidence, we will take action and we will, as appropriate, make public."

Paul Fisher, Boe's Executive Director for Markets:

Not Our Job to Go Out Hunting for Rigging

"We have gone through a process recently of asking people whether they knew of any other issues in the markets. It isn't our job to go out hunting for rigging on markets."

Governor Mark Carney:

How the Bank Heard About Market Manipulation Allegations

"We had information from a member of the private sector, quite a credible member of the private sector, and also associated contact from the head of enforcement at the (FCA)."

Fx Fixing Allegation as Serious as Libor if Not More So

"This is extremely serious. As Martin Wheatley has rightly said this is as serious as Libor if not more so because this goes to the heart of integrity of markets and we have to establish the integrity of markets. Time will tell."

Cooperating With Other Central Banks

"There has been complete open, consistent, cooperation, at least from our perspective, with the FCA. We have been very intensively cooperating with other major central banks around the world, addressing this and so we have been supporting investigations and we have been doing what you would expect us to do, which is to think about where do we go from here."

On Suspended Official's Line Manager

When asked about consequences for the suspended individual's line manager, Carney said:

"The oversight committee will look at all relevant employees ... to have a very targeted, focused report which relates to any individual."

On Suspension of Boe Member of Staff

"The suspension relates to investigation of the keeping of our rigorous internal control procedures, including around records management and escalation."

On Procedures, Asking Staff

"One of the questions is 'What are we going to do about it as the Bank of England?' How are we going to change our procedures, not just our policies, but how they are followed and the extent to which they are followed not just some of the time but all of the time."

On the policy front "We have asked staff, Mr Fisher and colleagues in the relevant areas have asked staff, to attest they are following the escalation policy and they are not aware of any other circumstance in the past that is similar, analogous to potential market abuse."


"16th of October. A colleague had been informed by a market participant of an allegation. It was communicated to the governors. We met."

New Strategic Plan

"I referenced earlier in the previous session that we are going to launch our new strategic plan a week from today. Embedded in that are a series of measures to reinforce the positive cultural changes that have happened in the institution.

"More accountability - we're going to reinforce that through performance management, we're going to change some of the structure of the organisation in advance of the topic we're discussing today."

New Deputy Governor Role for Markets and Banking

"In the markets area we're going to create a new position, a deputy governor position responsible for markets and banking, we have a 400 billion (pounds) plus balance sheet of which you're aware, and a series of issues that need to be addressed and we will benefit from senior-most executive responsibility there. One of the first tasks of that individual is that he or she will conduct a root-and-branch review of how we conduct market intelligence."


"We have no information that suggests that anyone at the Bank of England condoned manipulation, or facilitated, participated in market manipulation, but that's a pretty low bar.

Paul Fisher, Boe's Executive Director for Markets:

Did Not Hear Any Allegations

"I have never come across myself at any of these meetings or discussions specific allegations of people rigging the market, until we heard this news that started to come through last year.

Governor Mark Carney:

On "Relentlessly" Following Up Allegations

"I would say that I personally have been impressed by the thoroughness of (the external reviewer's) work, because this has taken a comprehensive consistent relentless approach to evidence - both obvious and not obvious."

"My view is that it's only because of that, that we are in the situation that we are today, and you have every right to expect that we would be in the situation that we would have relentlessly followed up on these alllegations - but we have done so, and will continue to."

On Timeline

"We first became aware ... a member of the bank first became aware of allegations related to (issues) we were discussing on the 16th of October. I was informed then, I informed the chair of court that day, we convened governors, we decided to launch an investigation within 48 hours we retained external council and they had begun a very thorough, systematic, relentless investigation."

"At the subsequent meeting of court in November, I briefed court on the status. The advice of council was that we would keep the investigation, at that stage, we would keep it secret so as not to prejudice the investigation. We followed that advice and by necessity there was redaction of those minutes with subsequent events ... we can unredact those minutes now given events that have transpired. Subsequent minutes contained reference to this as it came out into the public domain including through testimony of Mr. Bailey."

On a Law Firm's Review

"This has taken a comprehensive, consistent, relentless approach to evidence, both obvious and not obvious."


"Best practice would appear, to discharge this type of rule, would be to have external expertise, not just legal expertise but an external person to run these types of reviews, and also to run the reviews of the bank's policy functions."

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