The Bank of England (BoE) has seen no evidence to back media allegations that it condoned or was aware of manipulation of reference rates in the foreign exchange market, it said today.
The central bank discussed with top London currency dealers their process for setting foreign exchange benchmark rates at a meeting in April 2012, more than a year before a global investigation into alleged manipulation.
Two sources with knowledge of the meeting said last month that the traders had told the BoE about the use of online chatrooms in the run-up to the daily currency rate setting.
But Andrew Bailey, the Bank's deputy governor and chief executive of the Bank's Prudential Regulation Authority, told parliament's Treasury Select Committee today it had no evidence to suggest that bank officials in any sense condoned the manipulation of the rate-setting process.
"I should say that we have no evidence yet, and we have not seen the evidence that was in the Bloomberg report," he added.
Bloomberg News said on February 7ththat Bank of England officials told currency traders at the April 2012 meeting that it was not improper to share impending customer orders with counterparts at other firms.
A senior trader gave his notes from the meeting to the Financial Conduct Authority, Bloomberg said. "The Bank of England does not condone any form of market manipulation in any context whatsoever," Mr Bailey told MPs today.
“On the evidence we have currently, we have no evidence to substantiate the claim that bank officials in any sense condoned or were informed of price manipulation or the sharing of confidential client information,” Mr Bailey added. “We’ve released the minutes of that meeting, but obviously there are now allegations that there are different versions of what happened at that meeting,” Mr Bailey said.
He said the claims, which the central bank first heard about last October, were being taken “very seriously” and a full review was now underway, led by the bank’s internal legal counsel with support from an external counsel.
Mr Bailey said the review was in close co-operation with the Financial Conduct Authority (FCA), which is also investigating broader allegations of manipulation in the foreign exchange markets.
Last week the FCA's chief executive, Martin Wheatley, told the same parliamentary committee that the broader allegations of manipulation of exchange rates were "every bit as bad as Libor".
The Libor interest-rate rigging scandal has so far cost banks around the world $6 billion in fines and settlements.
