The BBC uncovered a secret recording involving the Bank of England in the Libor rigging scandal.
The recording uncovered by the BBC consists of a discussion between two bankers at Barclays, one of them saying that the government and the Bank of England were pressuring them to lower the rate they offered for the Libor. The recording supports the accusations that the Bank of England pressured commercial banks to put their Libor rates down.
This recording took place in 2008 and shows that the Bank of England pressured commercial banks to lower their Libor rates during the financial crisis.
As a reminder, the Libor (London Interbank Offered Rate) is the rate at which banks lend to each other. The Libor is also used as a reference point for loans and mortgages. It is set every day by a panel of leading banks.
This scandal raises the question of whether financial institutions can be trusted. As part of the Public Consultation on the European Supervisory Authorities (ESAs), one of the ideas submitted by the European Commission is to increase the power of those European institutions so they can redouble their focus on supervisory convergence.
Read The Guardian article here