Independent – European leaders backed major reform of hedge funds yesterday as part of structural changes to help the world’s financial institutions emerge stronger from the global economic crisis.

Short-selling by the secretive hedge fund industry — selling borrowed stock in the anticipation that the prices will fall — was blamed by some politicians for exacerbating the banking crisis and economic meltdown.

A copy of the summary from the summit hosted by German Chancellor Angela Merkel in Berlin said banks should bring in reforms to ensure they build up a buffer of resources in good times and called for sanctions against tax havens.

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