CAYMAN ISLANDS - The registered home to 80% of the world's hedge funds has reaffirmed its unwillingness to introduce stricter regulations on these products.

The head of the Cayman Islands Monetary Authority (CIMA) said that most of the risk involved in hedge funds occurred in New York, Tokyo and London.

Timothy Ridley, who chairs the CIMA, told Reuters it would be "counterproductive" to move "ahead of the curve".

Banking assets on the Cayman Islands currently exceed US$1.4trn.

In February, finance ministers of the G-7 countries, which include all three financial centres named by Ridley, decided against stronger hedge fund regulation themselves, stating a preferred policy of greater vigilance and citing "practical and methological problems" as two of the reasons against.

"Reputational risk is obviously very high in the mind of the Cayman government and obviously of the monetary authority," Ridley told Reuters. "But you just have to be comfortable in your own mind that you've set your level at the appropriate level that meets what you consider to be international standards."

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