Who judges the Bank of England?

The main facade of the Bank of England, on Threadneedle Street in the City of London, with the Royal Exchange on the right, 21/01/2009

MPs on the Treasury Select Committee have profound doubts about whether the Bank of England, with all its sweeping economic and regulatory powers, is subject to sufficient checks and balances - whether its governance is adequate.

These concerns have been sharpened by last week's disclosure that the Bank had suspended an employee, following allegations that it was aware eight years ago of suspected manipulation of the multi-trillion-dollar foreign exchange market.

The Bank denies it colluded in market-rigging.

But any day now its so-called oversight committee will confirm that the allegations of the Bank ignoring signs of market corruption will be independently investigated and evaluated by a senior external lawyer, whose work will be based on a soon-to-be-completed initial report by the solicitors Travers Smith.

Bank of England governor Mark Carney might well wish to make this announcement when grilled today by MPs.

But he can't, and won't - because that would damage the independence of the oversight committee, made up of non-executives from the Bank's court or board, and would go some way to corroborate MPs' fears that Mr Carney and his fellow executives aren't sufficiently held to account.

Also, and as a Bank director said to me, the Bank does not dare invoke its traditional secrecy when faced with such grave accusations.

I asked him whether the yet-to-be-chosen external lawyer was likely to conclude the Bank was innocent, negligent or wilfully blind to currency fixing - or even, perhaps, complicit, for all its assertions that there is no evidence that it colluded.

His answer, that he simply did not know, was not what I anticipated.

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 275.

    Sir Algernon Frayed Cuffs: who are these people? They are the ones who have for 25 years used their newspapers to try to get us to leave the EU so that they can make more money unregulated, the super rich non residents (JOKE), the men whose money controls the world. They are the Salamander members of the BBC4 series but on a world scale.

  • rate this

    Comment number 274.

    And now Mr Fisher of the BOE has said that "It's not our job to go hunting for market wrongdoing"! What Rubbish!!! The BOE should have realised that Northern Rock lending 120% of purchase prices, then lending more for furniture and perhaps not taking up/ignoring references and surveys was heading for disaster. The BOE needs to be purged of such people as Fisher and "let pensioners spend" Bean.

  • rate this

    Comment number 273.

    On the very same day Mr Carney gave his 'evidence' news came that the UKs retail sales had fallen for the first time in 10 months. Our recovery is based on sharply increasing consumer spending and investment. A fall in sales will definitely not have helped. Now it has become virtually treasonable to downplay confidence, it will be interesting to see if Mr Carney can hold his nerve of independence

  • Comment number 272.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 271.

    265. mr_market

    Dear Censors, if you had any knowledge of finance or libel laws (ie your job) then you would have marked this comment for "consideration".

    I'm so glad I don't pay a single penny for your incompetence.


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