- Additional Authors
- Found In
- OECD Journal: Financial Market Trends Vol. 2008, no. 1, p. 117-132 1995-2872
- Description
- 16 p.
- Summary
- Sovereign Wealth Funds (SWFs) are pools of assets owned and managed directly or indirectly by governments to achieve national objectives. These funds have raised concerns about: i) financial stability; ii) corporate governance and iii) political interference and protectionism. At the same time governments have formed other large pools of capital to finance public pension systems, i.e. Public Pension Reserve Funds (PPRFs). SWFs are set up to diversify and improve the return on foreign exchange reserves or commodity revenue, and to shield the domestic economy from fluctuations in commodity prices. PPRFs are set up to contribute to financing pay-as-you-go pension plans. The total of SWF pools is estimated at around USD 2.6 trillion in 2006/7, and is getting bigger rapidly, owing to current exchange rate policies and oil prices. The total amount for PPRFs is even larger, around USD 4.4 trillion in 2006/7, if the US Trust Fund is included (USD 2.2 trillion if excluded). SWFs and PPRFs share some characteristics, hence give rise to similar concerns. However, their objectives, investment strategies, sources of funding and transparency requirements differ. There is concern about strategic and political objectives of SWFs, and their impact on exchange rates and asset prices. But SWFs also provide mechanisms for breaking up concentrations of portfolios that increase risk. Enhancing governance and transparency of SWFs is important, but such considerations have to be weighed against commercial objectives.
- Subject
- Finance and Investment
- LCCN
- 10.1787/fmt-v2008-art5-en
- OCLC
- oecd-lib-002925
- Author
Blundell-Wignall, Adrian.
- Title
Sovereign wealth & pension fund issues [electronic resource] / Adrian Blundell-Wignall, Yu-Wei Hu and Juan Yermo
- Imprint
Paris : OECD Publishing, 2008.
- Connect to:
- Indexed Term
Finance and Investment
- Added Author
Hu, Yu-Wei.
Yermo, Juan.
- Found In:
OECD Journal: Financial Market Trends Vol. 2008, no. 1, p. 117-132 2008:1<117 1995-2872
- Other Standard Identifier
10.1787/fmt-v2008-art5-en doi