European Union internal market commissioner dismissed suggestions that greater regulation is needed for the hedge funds industry.
Charlie McCreevy said it is up to central banks and national regulators to decide whether hedge funds pose a systemic risk to financial stability. He said he will not start down a road which could lead to over-regulation, according to the Hedgefunds World write up of the report.
Germany has been the most vocal in its criticism of hedge funds accusing the industry of short-termism. The German Chancellor called for greater regulation of hedge funds in recent weeks.
McCreevy was speaking on the day a report on Europe’s fund management industry was publised.
The report found that there is no case for fundamental legislative overhaul at the present time.
The European fund industry currently manages more than EUR5,000bn ($6,046bn) of assets, of which some EUR4,000bn are covered by an EU directive known as Ucits (Undertakings for collective investment in transferable securities).
The law allows funds to be marketed across the EU provided they guarantee a certain degree of investor protection.
The report found that European law does not allow the full potential of the fund industry to be optimised and points out that funds in Europe are five times smaller than U.S. funds.
The Commission said it will tackle these shortfalls by exhausting the possibilities offered by the existing framework.