An unprecedented criminal investigation is underway at the Bank of England with the Serious Fraud Office probing emergency lending measures taken by the bank at the height of the credit crisis to inject cash into financial markets.
During the period between late 2007 and early 2008, as authorities sought to keep the financial markets from freezing up, banks were invited to borrow funds against collateral in a series of so-called ''auctions''.
The conduct of these liquidity auctions, now under the SFO's scanner, which confirmed the launch of an official investigation. In a statement, the SFO said it was ''investigating material referred to it by the Bank of England concerning liquidity auctions during the financial crisis in 2007 and 2008''.
The Bank of England said in response, ''The Bank can now confirm that it commissioned Lord Grabiner QC to conduct an independent inquiry into liquidity auctions during the financial crisis in 2007 and 2008. Following the conclusion of that initial inquiry, the BoE referred the matter to the SFO on 20 November 2014.''
"Given the SFO investigation is ongoing, it is not appropriate for the Bank to provide any additional comment on the matter at this time.''
The Bank declined to comment further and it remained unclear why the investigation was not made public before now.
Mark Carney, the Bank's governor, had refused to comment when asked about the investigation by MPs earlier this week and it was also not clear whether the Bank's employees were under suspicion in the matter.
The move comes after the SFO was handed the results of an inquiry conducted last year by Lord Grabiner into whether any senior staff at the Bank were aware its auctions might have been rigged.
The period between late 2007 and early 2008 saw the Bank lend money against low and negative interest rates in return for asset-backed securities.
The Bank revealed to a Treasury select committee on Tuesday that it had handed the Financial Conduct Authority dozens of instances of possible market rigging after it introduced new whistleblowing rules in the wake of the foreign exchange scandal.