Washington- Hedge-fund managers planned to meet finance officials from the world's seven leading economies at the weekend, spurred by a German campaign for tighter regulation of the industry's risks. The growing role of loosely regulated hedge funds in financial markets has pushed the talks onto the agenda of the Group of Seven. Tim Adams, the deputy US Treasury secretary for international relations, said Sunday's meeting would be a chance for the two sides to "share notes."
With G7 finance ministers and central bankers in Washington for talks Friday and to take part Saturday in the International Monetary Fund's (IMF's) spring meetings, topics were also expected to include global imbalances, IMF reform, poor-country debt and fighting terrorism financing, Adams told reporters.
No breakthrough was expected in complex negotiations to adjust the voting shares of the fund's 185 member countries to reflect shifting economic power in the world.
"I cannot say that we have narrowed down differences," IMF Managing Director Rodrigo de Rato said Thursday, adding, however, that this weekend's semiannual meetings of the fund and the World Bank "will probably narrow down" the economic criteria used to determine the new voting rights.
IMF members have given themselves until 2008 to agree on the new power-sharing structure.
US officials also planned to renew a push for the IMF to be more assertive in overseeing exchange rates, an issue sharpened by conflict between the United States and China over Washington9s claims that China is keeping its currency artificially weak to boost its exports.
"We are reaching a critical time on reform of the IMF," Adams said. "The IMF needs a package of meaningful reforms to safeguard its relevance and legitimacy."
Germany has made its push for stronger oversight of hedge funds a hallmark of its yearlong G7 presidency. Other G7 members are Britain, Canada, France, Italy, Japan and the United States.
German leaders have proposed drawing up a voluntary code of conduct for hedge funds. But with the United States, Canada and Britain wary of regulation, German government officials have downplayed hopes for an agreement in 2007.
Hedge funds are fast-growing private pools of capital that hold an estimated 1.4 billion dollars in assets. US Federal Reserve Chairman Ben Bernanke argued Wednesday for relatively light oversight.
"Because hedge funds deal with highly sophisticated counterparties and investors and because they have no claims on the federal safety net, the light regulatory touch seems largely justified," the US central bank chief said in New York.
Debate over the role of hedge funds and private-equity firms erupted during Germany's 2005 election campaign when Social Democratic politician Franz Muentefering denounced "faceless" financial investors who "attack companies like locusts, strip them bare and move on."
Muentefering now is Germany's minister for labour and social affairs.
