BoE chief to face questioning over Northern Rock crisis
Friday, 21 September 2007
LONDON, Sept 20 (AFP): Bank of England Governor Mervyn King is set to testify to a parliamentary oversight committee today over the recent Northern Rock crisis, with questions being raised over his tenure.
The central bank said yesterday that it would inject 10 billion pounds (20 billion dollars, 14.3 billion euros) into longer-term money markets amid the ongoing global credit squeeze, despite the fact that King said last week that such a tactic would encourage excessive risk-taking.
Confidence in the banking system has been shaken since Britain's fifth- biggest mortgage lender Northern Rock applied for emergency funds from the Bank of England last week because of the credit crunch.
The lender's share price fell by more than half in two days, and thousands of customers lined up outside its branches to close their accounts until the finance ministry announced Monday that the government would guarantee the value of all existing deposits at Northern Rock.
King's testimony to the House of Commons Treasury select committee is likely to focus on the central bank's response to the aftermath of the Northern Rock emergency loan, and its decision to inject funds into the money markets.
The central bank said yesterday that it would inject 10 billion pounds (20 billion dollars, 14.3 billion euros) into longer-term money markets amid the ongoing global credit squeeze, despite the fact that King said last week that such a tactic would encourage excessive risk-taking.
Confidence in the banking system has been shaken since Britain's fifth- biggest mortgage lender Northern Rock applied for emergency funds from the Bank of England last week because of the credit crunch.
The lender's share price fell by more than half in two days, and thousands of customers lined up outside its branches to close their accounts until the finance ministry announced Monday that the government would guarantee the value of all existing deposits at Northern Rock.
King's testimony to the House of Commons Treasury select committee is likely to focus on the central bank's response to the aftermath of the Northern Rock emergency loan, and its decision to inject funds into the money markets.