More Details: International Forum of SWFs

Ashby Monk

As previously reported, the International Working Group of SWFs is evolving into a permanent representative forum that aims to exchange views and promote understanding of SWFs (which, by the way, so are we). In addition, the International Forum will continue the Group’s work on the Santiago Principles and help the funds face a difficult investment climate. The Forum will even offer SWFs some ideas on how best to explain recent losses:

“…communicating these losses to stakeholders such as the government and the public at large has become a major task for SWFs. The Forum could help SWFs learn from one another how to deal with this and related policy and operational issues.”

Anyway, the IMF, which will spearhead the formation of a secretariat, had a press release yesterday with some more details:

“The Forum also established three subcommittees to carry out its work plan. These panels will work on experiences in application of the Santiago Principles; investment and risk management practices; and the international investment environment and recipient country relationships, including cross-border investment regime issues.”

What I found interesting was the fact the Forum pledges to “do whatever is necessary to promote global trade and investment and reject protectionism, to underpin prosperity.” This left me thinking that Eric Helleiner‘s recent article in Geopolitics was spot on. To summarize, he argued that Western fears about SWFs are misplaced. Even in situations where non-allies sponsor SWFs, the fund will bolster support within these governments for international cooperation, a stable financial system, open markets, and, generally, give these countries a new stake in the global economy. As such, rather than representing a threat to the West, these funds may eventually bring countries closer together in terms of global economic views.

This, I think, is a compelling point.

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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