LONDON — The Bank of England’s reputation is at stake as its independent directors conduct a review into whether bank officials knew of or condoned potential manipulation of the currency markets, Mark J. Carney, the bank’s governor, told lawmakers Tuesday.
Last week, the central bank suspended one of its employees after a series of investigations by regulators into whether currency traders colluded to manipulate the $5-trillion-a-day foreign exchange markets. The suspension was made pending the outcome of an investigation into whether the employee had complied with its internal control processes, the Bank of England said.
The central bank has to be “beyond reproach,” Carney said in testimony before the Treasury Select Committee.
The bank has adopted stricter policies requiring employees to escalate internally any reports they receive of improper conduct and to attest to whether they were aware of any potential wrongdoing in the past.
“We can’t come out of this at the back end with a shadow of doubt about the integrity of the Bank of England,” Carney said.
As part of an overhaul of the organization to be revealed in detail next week, Carney said the Bank of England planned to create a new deputy governor position responsible for markets and banking. The deputy governor’s first task will be to conduct a review of how the central bank conducts market intelligence and make sure its policies are consistently applied, he said.
The Bank of England has faced questions in recent months about communications between its staff members and traders on an industry subcommittee that discussed issues affecting the currency markets.