Sweden marked the first day of its six-month European Union presidency on Wednesday by coming to the defence of hedge funds and private equity, promising to press for improvements in EU proposals for tougher regulation of both groups.
Mats Odell, the countryâ??s financial markets minister, said: "There is an exaggerated fear that private equity contains big systemic risk. Our opinion is that it does not."
Mr Odellâ??s remarks carry weight because Sweden, as holder of the rotating EU presidency, will chair the discussions at which EU government ministers will assess and, if necessary, amend the commissionâ??s legislative proposals. Lord Myners, the UKâ??s financial services secretary to the Treasury, last month labelled the commissionâ??s proposals 'flawed' and said they should be revised.
"It is not private equity that caused the crisis, nor hedge funds. But in some countries, the political debate portrays private equity and hedge funds as the problem. Thatâ??s not the same as saying we shouldnâ??t regulate them. But the aim is to have sound regulation and not to kill the industry," said Mr Odell.
Private equity chiefs see the Swedish presidency of the EU as a window to water down the proposed regulation before Spain takes over on January 1. Yet comments on Wednesday by Peer Steinbrück, German finance minister, suggest Sweden and the UK could still face stiff resistance in altering the commission proposals.
Speaking in Berlin, he accused the British government of resisting international efforts to tighten financial market regulations in order to protect the City of Londonâ??s position as a financial centre.
