The finance ministers of the European Union countries have backed the indirect approach to hedge fund supervision developed by the UK's Financial Services Authority in preference to a voluntary code proposed by Germany.

The Council of the European Union, comprising the EU's finance ministers, said: "The council notes that the so-called 'indirect supervision' approach, through close supervisory monitoring of credit institutions' exposures to hedge funds and progress in upgrading their internal risk management systems, has so far enhanced resilience to systemic shocks."