BoE's King to be quizzed over market turmoil - report UPDATE |
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Tue, 04 Sep 2007 08:48
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(adds detail of Telegraph report on strained relations between BoE and the City)LONDON (Thomson Financial) - The Treasury Select Committee will quiz the Bank of England governor Mervyn King and the heads of the Financial Services Authority, Sir Callum McCarthy and Hector Sants, this month about the causes of the credit crunch and the way they have handled the crisis, the Independent reports today.Key questions will reportedly centre on the BoE's emergency credit facility, the role of credit rating agencies, and the stability of the financial system.'We will ask how the emergency facility is being used, what the Bank's view of liquidity is, how we got into this position, and what reassurances the Bank can provide as to the stability of the entire system,' said Michael Fallon, the senior Conservative member on the committee.Both the BoE and the FSA have remained tight-lipped during the turmoil over the last month.The Bank has not clarified why its standby credit facility was being used and the FSA has refused to discuss specific financial structures, such as collateralised debt obligations and structured investment vehicles, which have been at the heart of the recent turmoil.In a separate article, The Daily Telegraph reports that relations between the BoE and the banking industry have become strained, with senior financiers in the City criticising the bank after money-market lending rates hit an eight-and-a-half year high.The paper quotes an unnamed senior banker calling the BoE 'Victorian' for its passive approach to the turbulence in the credit markets. Unlike the Federal Reserve and European Central Bank, the BoE has refrained from injecting additional liquidity into the financial system.Yesterday, the interbank lending rate for three-month debt rose to 6.74 pct, its highest level since 1998, although the paper cites traders as saying this is almost irrelevant as three-month lending between banks has all but dried up due to a lack of liquidity.pan.pylas@thomson.compp/lce/rar/cm2COPYRIGHTCopyright AFX News Limited 2007. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
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BoE's King says businesses pose main inflation risk UPDATE 