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Carney faces tough questions on forex rate-fixing

Bank of England governor Mark Carney will today face a grilling by MPs over claims that some of its officials knew about the alleged practice of foreign exchange rate-fixing.

Mr Carney is due to appear before the Treasury Select Committee just days after the Bank suspended an employee over compliance concerns following an internal probe.

More: Carney to answer questions on currency union

Carney to answer questions on currency union

Governor of the Bank of England Mark Carney speaks during the bank's inflation report news conference in central London. Credit: Dan Kitwood/PA Wire

Governor of the Bank of England Mark Carney will meet with the Treasury Select Committee to answer questions on the "economics of currency unions" amid debate over the possible implications of a Scottish vote for independence.

Chancellor George Osborne has already ruled out a currency union between an independent Scotland and the rest of the UK.

First Minister Alex Salmond's Scottish Government wants to create a "sterling zone" with the rest of the UK if there is a Yes vote in the break-away referendum.

Mr Carney said in a speech in January that an effective currency union would force a newly-independent Scotland to hand over some national sovereignty in a similar way to how this is done in the eurozone.

"Any arrangement to retain sterling in an independent Scotland would need to be negotiated between the Westminster and Scottish parliaments," he said. "The Bank of England would implement whatever monetary arrangements were put in place."

More: Salmond not facing up to weaknesses on sterling row

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Carney: Recovery 'too fragile' to raise interest rates yet

The Governor of the Bank of England has told ITV News the economic recovery remains too fragile to raise rates yet.

Mark Carney's comments come as the Bank today abandoned its flagship forward guidance policy linking interest rates to unemployment after just six months - but insisted they must remain low for longer to support the economy:

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Bank of England expecting to make £18m savings

A statement on the Bank of England website said:

The review looked at staff deployment and direct expenditure and has identified savings of around £18m by 2015/16 (around 10% of the spend reviewed).

Funds released through this review will be re-invested across the business in order to support delivery of the Bank’s statutory objectives.

As a result, a number of teams around Central Services will be reorganised.

The changes will provide new opportunities for some staff, as they will move to new roles in the organisation.

A number of other jobs will not be filled as staff retire or move on. It is, however, envisaged that there will be between 80-100 redundancies, subject to staff consultation.

The Bank is working closely with the Bank’s union to ensure that affected staff will receive support to find alternative employment.

– Bank of England

Treasury: Scottish Government needs a Plan B

Economics Editor Richard Edgar is in Edinburgh and listened to the Bank of England governor's speech on how a newly-independent Scotland could retain sterling:

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Treasury's blunt response to Carney's speech: "A currency union is highly unlikely to be agreed. The Scottish Government needs a Plan B.”

Read Richard's analysis of the Bank of England governor's speech

Carney's speech 'devastating' for Salmond's plans

Former chancellor Alistair Darling, who also leads the Better Together campaign to keep Scotland in the UK, said Bank of England governor Mark Carney's speech on currency union spells out stark problems.

Former chancellor Alistair Darling. Credit: David Cheskin/PA Wire

Mr Darling said: "This is a detailed speech but make no mistake - the governor's judgment on currency unions is devastating for Alex Salmond's currency plans. Why? Because the whole point of independence is to break the fiscal and political union that makes monetary union possible.

"The governor has spelled out in stark terms the problems of a currency union. Above all, it needs people living in the rest of the UK to agree to something they have never been asked about.

"As the governor makes clear, in a currency union both sides have to agree to each other's taxes, spending and borrowing. This is what is happening in the eurozone today.

"It is highly unlikely that the people living in the rest of the UK would agree to this. And remember, in a currency union like this, Scotland has 10% of GDP and the rest of the UK would have 90%. It is clear who would call the shots."

Read: Carney's speech may cause headaches for Salmond

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