In what has to be the most disappointing denial of central bank manipulation of a market in recent history, and probably never, the Bank of England today announced that it "has seen no evidence to back media allegations that it condoned or was aware of manipulation of reference rates in the foreign exchange market." As a reminder, last week we reported [8], that according to a Bloomberg, "Bank of England officials told currency traders it wasn’t improper to share impending customer orders with counterparts at other firms" or, in other words, the highest monetary authority in England, and the oldest modern central bank, explicitly condoned and encouraged manipulation. Fast forward to today when Andrew Bailey, the Bank's deputy governor and chief executive of the Bank's Prudential Regulation Authority, told parliament's Treasury Select Committee on Tuesday it had no evidence to suggest that bank officials in any sense condoned the manipulation of the rate-setting process. In other words, it very well may have... but there just is no evidence - obviously in keeping with the bank's very strict "smoking manipulation gun document retention policy."
Then again, such evidence already was presented to UK regulators: "Bloomberg News said on February 7 that the Bank officials told currency traders at the April 2012 meeting that it wasn't 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."
Hence, Mr Bailey had to modestly revise his statement:
"I should say that we have no evidence yet, and we have not seen the evidence that was in the Bloomberg report," he added.
He added that the Bank of England review was in close cooperation with the Financial Conduct Authority (FCA), which is also investigating broader allegations of manipulation in the foreign exchange markets.
Which obviously means that should the BOE never be "confronted" with the evidence, and it mysteriously "disappears", it simply means that one of Mark Carney's henchmen pulled a few levers at the FCA, and made it disappear: of course, on national security grounds, because should it surface that a central bank is merely a criminal organization, then faith and confidence in the Ponzi system might falter. It would also mean confirm what most people who care about these things know: when it comes to UK governance, the buck stops with Threadneedle. And not only there, but everywhere else too.
The rest of the report is trivial fluff and generic spin:
"The Bank does not condone any form of market manipulation in any context whatsoever," Bailey told the lawmakers on Tuesday.
"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," 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," Bailey said.
Bailey 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.
Perhaps just to confirm how serious the "review" is, Bailey should also release a few photos of the internal and external counsels operating the paper shredders with the passion of 2nd year Arthur Andersen intern.