The Bank of England is under investigation for fraud

Getty

Police watch fire burning next to the entrance to Bank station outside the Bank of England as anti capitalist and climate change activists demonstrate in the City of London.

However, the nightmare isn't over for Britain's central bank.

The BoE confirmed that Britain's Serious Fraud Office's investigators are probing the central bank for possible fraud related to liquidity auctions between 2007 and 2008.

During the financial crisis, the BoE invited banks to borrow money from the central bank, in exchange for collateral. This was conducted through a series of "liquidity auctions." The funds were designed to stop banks collapsing immediately and to keep the financial system functioning as normally as possible.

The BoE issued the following statement:

"Following the confirmation by the Serious Fraud Office (SFO) that it is investigating material referred to it by the Bank of England, 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."

Meanwhile, the SFO merely confirmed that it was "investigating material referred to it by the Bank of England concerning liquidity auctions" between 2007 and 2008.

Elsewhere, the chairman of the Treasury Select Committee, the panel of politicians that grilled Carney earlier this week over the FX fixing scandal, said that the referral was the "right thing to do".

"We must now await the outcome of the SFO's work. The sooner their findings are published, the better," added Andrew Tyrie.