Mark Carney faces MPs over forex fixing investigation

Bank of England governor Mark Carney will today face a grilling by MPs over claims that some of its officials knew about the alleged practice of foreign exchange rate-fixing.

Carney is due to appear before the Treasury Select Committee just days after the Bank suspended an employee over compliance concerns following an internal probe.

His deputy Andrew Bailey has already admitted that claims linking the Bank to the burgeoning forex scandal - which regulators say threatens to match the seriousness of Libor rate-rigging - could prove "enormously damaging".

Carney is due to give evidence about the allegations during a marathon three-part session which will also see him questioned over the abandonment of his flagship "forward guidance" policy on interest rates as well as Scottish independence.

The Bank was dragged into the forex affair - which is being investigated by the Financial Conduct Authority (FCA) - after a Bloomberg report centring on a meeting between officials and bank traders in 2012.

It was claimed that at the meeting, the traders admitted to the practice of sharing information about customer orders before currency benchmarks are set - an alleged practice at the heart of an ongoing regulatory probe into market manipulation.

They were said to have been told that there was no policy on these communications and that banks should make their own rules.

Bailey stressed during an appearance before MPs last month that the Bank did not condone any market manipulation and that it took the claims "very seriously".

Last week, it said it had found no evidence that its staff had been involved in forex manipulation, but revealed it had suspended a member of staff while it investigated compliance with internal control processes.

It has called in law firm Travers Smith to assist with its investigation into what its officials might have known about forex rigging or information-sharing in the market.