shocks and unexpected market events, without any tangible effect on their functioning. the banks ’ management of risk and their collateral requirements do appear to be stricter than they were in 1998. we will return to a further discussion of the resilience of the financial system when the riksbank ’ s financial stability report is published at the beginning of december. does the hedge fund market require further regulation? as the hedge funds have grown, voices have been raised calling for more extensive regulation of the funds ’ operations. ordinary investment funds are regulated by the ucits directive. ucits regulates, for instance, the type of assets a fund is allowed to invest in, the information that should be given to investors, and the diversification of risks. hedge funds, on the other hand, are completely unregulated in many countries. in return, the authorities often require that investments in hedge funds should exceed a certain minimum level. 4 the purpose of this requirement is to limit the hedge funds'investor circle to wealthy and, presumably, well - informed individuals and thereby to protect " ordinary " consumers. most hedge funds are constructed so that the investor, under unfortunate circumstances, may lose all or at least large parts of his capital. in the united states the securities and exchange commission has long attempted to increase transparency in hedge funds. in february this year they introduced a new regulation that entails a registration requirement for most large hedge funds – even those invested off - shore. however, this regulation was declared invalid by a federal court in june. in sweden, hedge funds are obliged to register with finansinspektionen, the swedish financial supervisory authority, and to regularly report any measures that describe the risks in the fund, such as value - at - risk measures or measures of liquidity risk and indebtedness. the main rule is that the fund ’ s resources, as in the case of securities funds, should be invested according to the principle regarding risk diversification. given this, it has not been considered necessary to set a minimum requirement for investment. previously, swedish hedge funds were obliged to report all of their holdings to finansinspektionen, but this was not considered particularly meaningful. there are two main arguments for regulating hedge funds ’ operations. the first is based on protecting the consumers from funds that take excessive risks. amaranth ’ s gigantic losses affected several pension funds, for instance. however, in my opinion, this type of argument is rather strange. if one wants

jean - pierre roth : central bank policy and developments on the real estate market summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank and chairman of the board of directors of the bank for international settlements, at the 8th international symposium of the group of fifteen, zurich, 1 february 2007. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * the swiss national bank takes considerable interest in the real estate market for a number of different reasons. movements in real estate prices, on which it focuses in particular, can have a bearing on private consumption, investments and bank lending in addition to directly influencing the consumer price index through the rent component. the snb ’ s monetary policy is aimed at maintaining price stability, as measured by changes in consumer prices. therefore, if it had reason to expect that developments in the real estate market could jeopardise price stability in the economy as a whole, the snb would definitely adjust its monetary policy. the swiss real estate market has shown a very positive performance over the last few years and has made a substantial contribution to the upturn of the economy. according to the national bank's assessment, the housing market in particular is currently well - balanced. the present situation thus gives no cause for concern. the snb will, however, continue to monitor developments closely, particularly those factors that might boost demand for residential space in the future. as the swiss economy is on the upswing, income is rising, as are the prices of assets. demographic changes could also add to the pressure. for instance, immigration of well - qualified persons with high purchasing power has increased quite steeply since the agreement on the free movement of persons entered into force almost five years ago. these factors all tend to drive up demand for residential space. so far, supply has been able to keep pace with the increasing demand. nevertheless, with supply adjusting only slowly, a higher level of demand could well accelerate price increases in the real estate market. it would then be the snb ’ s responsibility to ensure – under these more difficult circumstances – that price movements in the real estate market did not threaten price stability as a whole.