Bank of England faces grilling from the Commons

4 September 2007

The House of Commons' treasury committee will quiz the Bank of England's governor this month over the credit situation and the way it has been handled.

The heads of the Financial Services Authority (FSA) will also be questioned.

Mervyn King, the Bank of England's governor, and Sir John Gieve, the deputy governor for financial stability, will face the committee.

The bank's emergency credit facility, which was recently used by Barclays to borrow $3.2, is likely to be on the agenda, as well as the role of the credit rating agencies, and the general stability of the financial system.

Clarification between the roles of the Bank of England and the FSA in this type of situation will also be sought by the committee.

Speaking to the Independent, Michael Fallon, senior Conservative member of the committee, said: "We will ask how the emergency facility is being used, what the bank's view of liquidity is, how we got into this position, and what reassurances the bank can provide as to the stability of the entire system."

The sub-prime crisis in America has led to problems in the financial markets and a general feeling of instability.

The decision to hold the committee was made before the crisis, but it now represents a chance for the committee to question the organisations.

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