LONDON The chairman of the Financial Services Authority branded so-called carry trades "economically valueless," the Times reported on its website on Friday.
Adair Turner said banks and hedge funds that borrowed cheaply in U.S. dollars to bet on higher yielding investments in emerging markets were adding no value to the real economy, the paper said.
"If I could wave a magic wand here, and greatly reduce the carry trade, I'm pretty certain the world would be a better place," he was quoted as saying after a private session on casino banking and regulation at the World Economic Forum in Davos.
"It's a form of speculative activity where you can't work out what the value is to the real economy."
Turner, who last year said parts of London's financial district, were "socially useless," said carry trade speculators relied on being able to get out from the trade before the "train wreck," or sudden collapse of the trade they had bought.
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