Why is the Bank of England being investigated by the Serious Fraud Office?

The Bank of England (BoE) is being investigated by the Serious Fraud Office (SFO) for the way it lent money to banks during the financial crisis.

After the collapse of Northern Rock, the BoE held liquidity auctions in 2007 and 2008 to keep the economy going.

Liquidity auctions are the process of selling money or gilts to banks to help them continue lending. (The BBC has done a good explanation of how they work, read here)

Last year, the BoE launched its own investigation into the auctions and appointed senior barrister Grabiner QC to spearhead an independent inquiry.

The conclusions of the initial inquiry have now been referred to the SFO.

Andrew Tyrie MP, chairman of the House of Commons Treasury Select Committee, said: “The bank referred this to the Serious Fraud Office when Lord Grabiner’s initial findings were made clear to them – this was the right thing to do. The sooner their findings are published, the better.”

In a statement the BoE said: “Given the SFO investigation is ongoing, it is not appropriate for the bank to provide any additional comment on the matter at this time.”