Hong Kong's financial secretary Donald Tsang, who successfully used market intervention to see off speculators, has warned his peers against overreacting to the threat posed by hedge funds.
He says governments shouldn't hastily introduce regulations. Instead he suggests a softly- softly approach of greater transparency, disclosure and sharing of information among central banks, ahead of any regulation. He cautions against taking actions that might cut off capital flows.
Tsang is unrepentant about the Hong Kong government's HK$118.1 billion ($15 billion) share-buying operation in August, which was designed to hold up the market and foil short-selling by hedge funds.
The funds were attacking the Hong Kong dollar and betting that the high interest rates needed to defend the currency would send the stock market down so rewarding short-sellers of equities.
Since the intervention the stockmarket has risen 30%, making it - so far - a rare example of a successful government defence against speculators. As a result the government has wound up owning a large portfolio of shares, including stakes of over 10% of Swire Pacific, New World Development and Cheung Kong.
But given this success Tsang is surprisingly cautious about how hedge funds could be better controlled, a topic being debated by regulators worldwide and even the hedge funds themselves.