Germany has joined forces with France in an effort to block new European Union hedge fund regulations, which could allow funds and managers outside the EU to obtain pan-EU marketing rights or a ??passport".
Paris has consistently opposed giving pan-EU marketing rights to funds run from offshore centres such as the Cayman Islands, and wants member states instead to keep control of what products are sold in their individual markets.
But Brussels argues that pan-European access should be available provided funds or their managers meet required standards. That position is supported by the UK, where many fund managers in the City of London base funds offshore for tax reasons.
On Wednesday, however, the French position appeared to gain new support, with Germany making clear that it was prepared to take a similar line. In Paris, French finance minister Christine Lagarde said that, on the issue of alternative funds, ??I think our positions are now perfectly aligned?.
A French official later said that Ms Lagarde and her German counterpart, Wolfgang Schäuble, had spoken by telephone on Tuesday and that the German finance minister had sided with France in opposing the EU passport for funds domiciled in tax or regulatory havens.
In Brussels, officials also confirmed that this was now their understanding of the German position, although no one at the German finance ministry was immediately available to comment.
