The Bank of England has warned of “deep-rooted problems” in the City that are undermining public trust in the financial system, as it launched a sweeping review intended to wipe out market manipulation. In her first speech as deputy governor of the Bank of England, Nemat “Minouche” Shafik said the behaviour of traders in foreign exchange, currencies and bonds markets pointed to a pattern of behaviour that goes beyond a few rogue players. Saying she had found the behaviour of Libor riggers outrageous, Shafik said that the ongoing fines for misconduct were “like salt rubbed into the wounds to public confidence in financial markets”.
About £4bn of fines have already been levied for manipulation of key benchmark rates such as Libor and the City is braced for fines for rigging the currency markets to be announced next month. “Public outrage is based on the fact that rewards in finance are disproportionate and the system is rigged. When people read of malpractice in financial markets, of trading profits being claimed through manipulation, collusion or dishonesty, they naturally wonder if they are one of the people who have been wronged,” said Shafik.