The Bank of England risks losing access to vital sources of market data thanks to banks cracking down on traders gossiping, Lord Grabiner warned yesterday.
Top barrister Grabiner was hired to investigate what Bank of England staff might have known about foreign exchange manipulation.
He found an informal relationship between Bank officials and traders, with chats on Bloomberg messenger, and unrecorded lunch meetings to discuss the state of the forex markets. In the wake of the scandal, Grabiner fears these channels of information will close.
“Banks will be very wary on what they do and don’t say, first of all to other banks and secondly to the Bank of England,” Grabiner told the Treasury Select Committee of MPs.
Although the Bank of England did not regulate the foreign exchange market, traders “were willing to communicate intelligence to the Bank for uses in the national interest, but I suspect the effect will be that the source will dry up.”