By Stelios Orphanides
The European System of Central Banks (ESCB), comprised of all European Union national banks and the European Central Bank, welcomed the publication of the foreign exchange global code of conduct, the Central Bank of Cyprus said.
“This is a significant global initiative to promote a robust, fair, liquid, open and transparent foreign exchange market underpinned by high ethical standards which benefits all wholesale foreign exchange market participants,” the bank said, citing an ESCB statement. “Well-functioning financial markets are important to central banks in ensuring a smooth transmission of monetary policy to the real economy, from which all citizens should ultimately benefit”.
The code comes four years after reports emerged that banks had colluded to manipulate exchange rates with traders agreeing their strategy in Internet chatrooms. The reports prompted regulators in Europe, Asia and the US to look into the matter resulting in billions of US dollar in fines imposed on banks such as Citibank, HSBC, JPMorgan, Royal Bank of Scotland and UBS.
The members of the ESCB will encourage market participants in their respective jurisdictions “to evolve their practices in such a way that they are consistent with the principles of the Code and to demonstrate their commitment by endorsing the Statement of Commitment annexed to the Code,” the statement said.