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The emergence of sovereign wealth funds (SWFs) as major international investors has aroused public unease. Concerns relate to risks that SWFs’ investment flows may destabilise financial markets, and that investments by foreign government-controlled investors – SWFs or state-owned enterprises - may be motivated by political objectives and pose potential security threats. OECD countries and non-OECD partners are looking for ways to address these concerns while avoiding unnecessary restrictions on international investments.
SWFs – government-owned investment vehicles that are funded by foreign exchange assets -have existed for several decades. What is new is their spectacular growth, driven by large current account surpluses and increased revenues in oil producing economies, and the size of their overseas investments, especially by SWFs from non-OECD emerging economies (see table).
A full overview of the work on SWFs being undertaken by the OECD Investment Committee and its non-OECD partners can be found in the October 2007 edition of the Investment Newsletter.
On the occasion of the 6th Roundtable on Freedom of Investment, National Security and ‘Strategic’ Industries held in December 2007, the OECD Investment Committee held a consultation with stakeholders on Sovereign Wealth Funds (see the roundtable summary).
The OECD and the City of London, with the participation of the IMF, is organising a conference titled “Sovereign Wealth Funds in the Global Investment Landscape: Building Trust” which will be held in London on 31 March 2008. This will provide an opportunity for representatives of sovereign wealth funds (SWFs), private financial institutions and recipient governments to share views on what steps SWFs and recipient governments can take to build mutual confidence and trust.
OECD policy resources
Further reading
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