Jean-Claude Trichet, president of the European Central Bank, told the European Parliament Wednesday that tougher regulations on hedge funds may be necessary, but they must represent “a global solution.”
Trichet’s comments indicate that the Frankfurt-based ECB is willing to go further that many other global institutions in reiterating how risky hedge fund investments may be and what dangers could await investors following a herd mentality amid investment strategies with little transparency.
Financial authorities in general were not “fully satisfied” with a regulatory system that relied heavily on supervised banks monitoring the activities of hedge funds, he said
Trichet said he thinks a “world wide consensus” was within reach on what might be feasible in the hedge fund industry.