U.S. Treasury Secretary Henry Paulson said Friday it was important to make sure hedge fund liquidity and borrowing were closely monitored, but said they were making a helpful contribution to financial markets.
"By and large, hedge funds, derivatives, have been a positive for the capital markets. They've made them more efficient, more liquid, and they've been very helpful in dispersing risk," he told CNBC.com.
Asked about the systemic risk posed to markets if a hedge fund failed, Paulson said that this was why officials need to insist liquidity was protected and lending levels understood.
"We're focused on it. We're taking a very careful look at it," he said.
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Copyright Reuters 2006.
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