The IMF said on Friday that it was ratcheting up its scrutiny of sovereign wealth funds (SWFs) because of their rapidly growing financial clout.
IMF officials are planning to develop a blueprint of voluntary best practices for the government-run investment funds which straddle international markets and control estimated assets of between US$2 trillion and US$3 trillion.
"Official and private commentators have expressed concerns about the transparency of SWFs, including their size, and their investment strategies and that SWF investments may be affected by political objectives," an IMF staff paper said.
BIG STAKES
A number of governments, including oil-rich Middle East states, run large investment pools, some of which have snapped up big stakes in corporate America.
The Abu Dhabi Investment Authority (ADIA) of the United Arab Emirates and Singapore's Government Investment Corporation (GIC), which control funds with estimated assets of hundreds of billions of dollars, are two of the world's biggest funds.
ADIA invested US$7.5 billion in Citigroup, the US banking giant, in late November, followed by GIC, which snapped up a US$6.8 billion shareholding in the financial group this year.
Representatives from both funds were in Washington last week and met US Treasury Secretary Henry Paulson on Thursday.
The IMF staff paper, which was released to the media, also stated that the funds have become concerned about potential protectionist barriers which might be erected by some governments and could hamper their investments.
BEST PRACTICES
IMF officials said they hope to establish an international working group of sovereign wealth funds to develop a set of best practices.
The staff paper suggested that a set of principles and practices could be presented to the IMF board of directors for review ahead of the Fund's annual meetings for this year in October.
The Washington-based IMF, which has 185 member countries, would put together a blueprint for best practices under its remit of promoting global financial stability.
The IMF's working paper was released a day after the US Treasury said it had reached a series of agreements with the ADIA and GIC covering investments in US markets.
Other governments including Iran, SOuth Korea, Kuwait, Libya, Norway and Saudi Arabia also run sovereign wealth funds and China and Russia have more recently set up such investment pools.
Several funds, which seek to boost government revenues, have seen their financial muscle swell in the past year due to skyrocketing crude oil prices.
BACK IN THE NEIGHBORHOOD: The planned transit by the ‘Baden-Wuerttemberg’ and the ‘Frankfurt am Main’ would be the German Navy’s first passage since 2002 Two German warships are set to pass through the Taiwan Strait in the middle of this month, becoming the first German naval vessels to do so in 22 years, Der Spiegel reported on Saturday. Reuters last month reported that the warships, the frigate Baden-Wuerttemberg and the replenishment ship Frankfurt am Main, were awaiting orders from Berlin to sail the Strait, prompting a rebuke to Germany from Beijing. Der Spiegel cited unspecified sources as saying Beijing would not be formally notified of the German ships’ passage to emphasize that Berlin views the trip as normal. The German Federal Ministry of Defense declined to comment. While
‘UPHOLDING PEACE’: Taiwan’s foreign minister thanked the US Congress for using a ‘creative and effective way’ to deter Chinese military aggression toward the nation The US House of Representatives on Monday passed the Taiwan Conflict Deterrence Act, aimed at deterring Chinese aggression toward Taiwan by threatening to publish information about Chinese Communist Party (CCP) officials’ “illicit” financial assets if Beijing were to attack. The act would also “restrict financial services for certain immediate family of such officials,” the text of the legislation says. The bill was introduced in January last year by US representatives French Hill and Brad Sherman. After remarks from several members, it passed unanimously. “If China chooses to attack the free people of Taiwan, [the bill] requires the Treasury secretary to publish the illicit
A senior US military official yesterday warned his Chinese counterpart against Beijing’s “dangerous” moves in the South China Sea during the first talks of their kind between the commanders. Washington and Beijing remain at odds on issues from trade to the status of Taiwan and China’s increasingly assertive approach in disputed maritime regions, but they have sought to re-establish regular military-to-military talks in a bid to prevent flashpoint disputes from spinning out of control. Samuel Paparo, commander of the US Indo-Pacific Command, and Wu Yanan (吳亞男), head of the People’s Liberation Army (PLA) Southern Theater Command, talked via videoconference. Paparo “underscored the importance
CHINA POLICY: At the seventh US-EU Dialogue on China, the two sides issued strong support for Taiwan and condemned China’s actions in the South China Sea The US and EU issued a joint statement on Wednesday supporting Taiwan’s international participation, notably omitting the “one China” policy in a departure from previous similar statements, following high-level talks on China and the Indo-Pacific region. The statement also urged China to show restraint in the Taiwan Strait. US Deputy Secretary of State Kurt Campbell and European External Action Service Secretary-General Stefano Sannino cochaired the seventh US-EU Dialogue on China and the sixth US-EU Indo-Pacific Consultations from Monday to Tuesday. Since the Indo-Pacific consultations were launched in 2021, references to the “one China” policy have appeared in every statement apart from the
RSS