By Jonathan Davies

Bankers' pay could be clawed back in the event of wrongdoing under new proposals laid out by the governor of the Bank of England Mark Carney.

The governor's comment came in a speech in Singapore and is the first major policy reaction to the news that several banks were fined a collective £2bn for rigging currency markets.

Mr Carney said changes need to be made to the banking system, and stressed that he wanted to "help re-build trust in financial institutions".

He suggested that the currency rigging scandal shouldn't be treated any differently to a cashier stealing money from the till.

The governor said: "[It] is far from straightforward when, even six years on from the crisis and public bailouts, triggers for public opprobrium are plentiful," he said of the trust issue.

"Last week, the UK's Financial Conduct Authority, US CFTC and Swiss FINMA fined six banks $3.3bn for misconduct in FX markets: misconduct that went on long after banks had already been fined for abusing interbank interest rate benchmarks.

"The repeated nature of these fines demonstrates that financial penalties alone are not sufficient to address the issues raised. Fundamental change is needed to institutional culture, to compensation arrangements and to markets."

He added: "The succession of scandals means it is simply untenable now to argue that the problem is one of a few bad apples. The issue is with the barrels in which they are stored.

"Compensation schemes overvalued the present and heavily discounted the future, encouraging imprudent risk taking and short-termism.

"Standards may need to be developed to put non-bonus or fixed pay at risk. That could potentially be achieved through payment in instruments other than cash."

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