WASHINGTON Feb 14 Federal Reserve Chairman Ben
Bernanke said on Wednesday that U.S. authorities must take care
not to stifle financial innovation by over-regulating the
derivatives and hedge fund industries.
"I would be very reluctant to get involved in heavy-handed,
direct regulation of hedge funds," Bernanke told the Senate
Banking Committee in response to a question during semi-annual
testimony on monetary policy.
"One of their key characteristics is that they are very
nimble ... and that is good for the economy, because they help
to create liquidity in markets, they help to spread risks
around more broadly, and a regulatory regime that inhibited
that flexibility and nimbleness would eliminate a lot of the
economic benefits," he said.