Investment funds will come under greater regulatory focus globally in order to prevent another financial meltdown, Bank of England governor Mark Carney said.
Carney, who is also head of the Financial Stability Board (FSB) group of regulators, was quoted by Reuter saying that assets managed by investment funds were now equivalent to almost 90% of the global economy.
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"The biggest risks arise from combining high levels of leverage with holdings of illiquid assets and commitments to provide liquidity at short notice", added Carney.
These activities need to be monitored carefully and call for a deliberate policy response in the present landscape, Carney was further quoted as saying Reuters.
Global regulators are making plans to propose a new hybrid approach in the next few months that will allow supervision of funds and include tailored measures to mitigate potential disruption their response to rocky markets could cause.
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