LONDON: Britain’s Serious Fraud Office is investigating money-market auctions launched by the Bank of England during the financial crisis, the central bank has said, dealing another blow to the City’s reputation.

The bank said it had commissioned an inquiry into “liquidity auctions during the financial crisis in 2007 and 2008,” and had referred the results to the Serious Fraud Office (SFO) in November. “Given the SFO investigation is ongoing, it is not appropriate for the Bank to provide any additional comment on the matter at this time.”

It is the first time that the central bank has been implicated in a criminal inquiry since the SFO was set up in 1987, while the development risks further damage to the City, the term used to describe London’s banking sector.

Liquidity auctions are held to ensure that banks are not left short of cash, a particular concern during the financial crisis when assets were written down and customers threatened to withdraw vast sums of money following the collapse of lender Northern Rock.

Published in Dawn, March 6th, 2015

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