WILLEM Buiter, a former member of the Bank of England's monetary policy committee and professor at the London School of Economics, yesterday called for an end to the regulatory regime that is forcing pension funds into buying long-dated government bonds with record low yields, according to the Daily Telegraph .
His comments came as pension funds mopped up £650m of 50-year government debt despite the bonds offering the lowest ever real yield on an inflation-linked issue, reports the paper. It quotes Buiter as saying: "Increased supply is an obvious measure to mitigate some aspects of the problem of excessively low, long real interest rates. But to solve the pension fund crisis we have to end the madness of the regulatory regime.” Buiter questioned the ability of pension fund trustees to make these investment decisions, and the legal pressure they are under, saying that the ratio of utterly un...
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