There are sound reasons for the Bank to retain a heavy interest in supervision issues. It regulates the interbank system of credit transfers, and would have to sanction any bail-out of a British bank that was in crisis.

Even if the FSA is responsible for company inspections, it still leaves wider issues of regulation to the Bank.

Hedge fund managers who dissagreed with the criticism said: “The days of LTCM, where there was very little collateral used in investments, are over.” Hedge funds seldom trade without a “hedged position” to mitigate the risk and no longer leverage themselves to maximum levels.

Hedge funds tend to have very tight credit spreads, and are something to watch out for, as well as the risk of sudden changes in capital flows, especially related to hedge funds. If investors don’t start to see better hedge fund returns, then they will certainly stop pouring money in and may in fact start pulling money out. This reversal could seriously impact stock markets.

Many hedge fund managers are making changes in technology and controls that need updating to deal with the new volatility of the market. The biggest risk for any international company remains currency fluctuations, and this continues to pose a challenge for corporate treasurers.