Why Central Banks Will Soon Lend to Hedge Funds
Stricter monitoring and rules for money managers will be needed if markets are to be given more support.
Hedge funds, the Dutch central banker Klaas Knot is watching you
Photographer: Dhiraj Singh/BloombergHedge funds are in regulators’ sights again. Their risk-taking with borrowed money must be better monitored and will sometimes have to be limited, the head of a global group of supervisors told the Financial Times last week.
But it isn’t just hedge funds. The Financial Stability Board is reviewing the growth of leverage in markets so it can combat the risks posed by all non-bank money managers, according to the comments from Klaas Knot, the Dutch central bank chief who also chairs the FSB. Regulators want more disclosure of how much borrowing and leverage from derivatives exists and even to cap what some players can do.