Market News
Bank of England alarm as hedge fund gilt bets hit £100bn - THE GUARDIAN UK
Hedge funds have placed a £100bn bet on gilts that the Bank of England believes has left Britain dangerously exposed to a bond market meltdown.
Andrew Bailey will face questions from MPs this week after Threadneedle Street expressed alarm over trades that allow hedge funds to borrow huge amounts of cash from banks using gilts as collateral.
The Governor of the Bank of England has warned that volatility in the bond market is unavoidable.
Officials are now concerned that trading by hedge funds could pose risks to the financial system. They face less regulatory scrutiny than banks but control a growing share of global money.
Hedge funds have opposed proposals by regulators to limit risk-taking on gilts, warning that stricter rules could force them to shun UK debt and raise the Treasury’s borrowing costs.
Mr Bailey will face questions from the Treasury select committee this week about threats to UK financial stability.
