The alleged manipulation of foreign exchange markets is "as serious as" the Libor rate rigging scandal that rocked the financial sector, Bank of England governor Mark Carney has said.
"This is extremely serious... this is as serious as Libor, if not more so, because this goes to the heart of the integrity of markets and we have to establish the integrity of markets," Carney told British lawmakers.
Global regulators are investigating a number of firms linked to the suspected rigging of foreign exchange trading.
The probe comes on the heels of the Libor interbank interest rate-rigging scandal of 2012 that triggered heavy fines for major international banks and a boardroom shake-up at British banking giant Barclays.
Barclays, HSBC and Royal Bank of Scotland have all confirmed that they are part of the ongoing forex market investigations.
Deutsche Bank, Swiss lender UBS and US pair Citi and JPMorgan Chase have also revealed that they are co-operating with regulators over the affair.
Some lenders have meanwhile suspended and fired traders while investigations continue.
"We are taking this very seriously... what we have to do is re-establish the principles of fair markets so that people in these markets know how to behave and do so," Carney added.
The Bank of England was working with other major central banks to establish what happened and help fix the market infrastructure. The findings would then be presented to the leaders of G20, he added.
In a major overhaul, Carney revealed that the BoE will appoint a new deputy governor to focus on financial markets and banking. It will also press ahead with plans to beef up internal regulations.
"This is important to the FX (foreign exchange) market and to the integrity of the Bank of England," Canadian national Carney added.
"We owe it to the people of this country, to parliament, and to our employees, who have acted with integrity and a spirit of public service.
"We can't come out of this with a shadow of doubt about the integrity of the Bank of England. The institution has to be beyond reproach."
The Bank of England chief made the comments in a regular appearance before parliament's influential Treasury Select Committee to explain the central bank's most recent quarterly economic forecasts, but was also grilled over the growing forex rigging scandal.
The BoE had revealed last week that it had suspended a worker following a review of its processes triggered by a probe into suspected forex rigging.
The central bank has found no evidence that staff colluded in the alleged manipulation of the forex trades, 40 percent of which are conducted in London.
"We have no information that suggests that anyone at the Bank of England condoned manipulation of the market, facilitated (or) participated in market manipulation," Carney repeated today.
Meanwhile, Mr Carney also signalled he was not concerned that Britain's economy was close to overheating, despite a strong recovery since last year, putting himself in the dovish camp among policymakers.
He said the amount of spare capacity in the economy was probably slightly more than 1.5% of GDP.
This suggests that the BoE can hold off on raising interest rates for longer.
Mr Carney also said Britain's natural rate of unemployment could be less than the Bank has estimated, meaning the labour market can strengthen further without pushing up inflation.