Federal Reserve

China joins central banks' call for Bloomberg answers

PBOC joins calls for answers about firm's use of confidential client data

PUBLISHED : Tuesday, 14 May, 2013, 11:24am
UPDATED : Monday, 30 May, 2016, 2:05pm

China's central bank and foreign exchange regulator have joined the world's major monetary authorities in demanding answers from Bloomberg about access journalists at the global financial information provider may have to confidential data.

Sources close to senior officials at the People's Bank of China and the State Administration of Foreign Exchange (SAFE) told the South China Morning Post that both institutions had raised concerns with Bloomberg executives in Beijing in the face of a broadening privacy scandal at the data provider.

"The central bank has been in contact with Bloomberg in a private manner," said one source close to senior officials at the PBOC. The source said that the central bank and SAFE - guardian of the world's biggest stash of foreign reserves worth some US$3.4 trillion - had decided against making a public statement.

"The central bank doesn't want to come out and publicly comment on the Bloomberg case because the Chinese government has some concerns about its relations with the United States," said one source. "Communication work is already under way in a private manner."

The central bank doesn't want to come out and publicly comment on the Bloomberg case because the Chinese government has some concerns about its relations with the United States

The list of central banks that have said they were examining Bloomberg’s use of data includes the US Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of Canada, Germany’s Bundesbank.

The British central bank was less restrained as it registered concern over a practice that Bloomberg said had been in effect since its early days in the 1990s but only came to light last week.

“The protection of confidential information is vital here at the bank. What seems to have happened at Bloomberg is reprehensible,” a Bank of England spokesman said on Tuesday.

In Hong Kong, the Hong Kong Monetary Authority, the city's de facto central bank, said yesterday that it was aware of the incident and was "looking into the matter", but did not say if it had contacted Bloomberg.

The PBOC and SAFE both declined to comment when contacted by the Post.

Washington and Beijing have been embroiled for months in a diplomatic row over cybersecurity, with the Pentagon accusing the Chinese military of hacking attacks and Beijing calling the US the "real hacking empire".

Bloomberg, meanwhile, has already been subject to retaliatory action from Beijing since publishing a story last year highlighting the business connections and wealth of family members of China’s new president, Xi Jinping. The company's financial news site remains blocked on the mainland.

State media have also levelled sharp criticism of American technology icon Apple and US-based fast food companies. Beijing might not want to be seen as piling on by criticising Bloomberg.

"This is a very sensitive time for China and the US," said a source with close ties with the State Council, China's cabinet. "If we speak too loudly and too much [about the Bloomberg case], it may seem as if we are pouring oil on the fire."

An incentive for keeping the complaint private is that China desperately wants to diversify its vast haul of foreign wealth and needs foreign governments to drop their frequent blocking of investments by China's sovereign wealth fund and its giant state-backed businesses.

The scandal began with a Hong Kong-based Bloomberg reporter's inquiry about a Goldman Sachs banker's employment status in April after not logging into a Bloomberg terminal for some time.

Goldman complained, prompting a public apology from Bloomberg chief executive Daniel Doctoroff last week. Doctoroff followed that with a second apology yesterday in a bid to restore confidence among Bloomberg's 315,000 clients worldwide.

Bloomberg was founded in the 1980s by former investment banker Michael Bloomberg, who is in his third term as mayor of New York City.