Supra-Sovereign Wealth Fund

Ashby Monk

I’ve talked at length about the idea of SWF cooperation (here, here, and here). Significantly, the idea of formalizing such cooperation among SWFs has now been given an endorsement by China.

In a recent paper for the G20, Hu Xiaolian, China’s central bank deputy governor, proposed setting up a “supra-sovereign wealth investment fund” to facilitate additional investment in developing nations, reduce the danger of another financial crisis, and offer more alternatives to dollar denominated investments. The paper in which Hu made the suggestion is short on details — no mention is made as to how such a fund would be structured — but the idea is given some prominence in her concluding remarks.

As I’ve said before, this isn’t a bad idea; it may even be a good idea. But I have trouble seeing how such a fund will be governed and managed. Who will take the lead on investment decisions? To whom will the managers be accountable? To whom will the board be accountable?

Nonetheless, it is interesting to see the idea getting some traction among policymakers. It will be even more interesting to see where the idea goes from here.

5 Responses to “Supra-Sovereign Wealth Fund”

  1. 1 rien huizer September 23, 2009 at 9:38 pm

    What about the world bank group?

  2. 3 MMcC September 24, 2009 at 12:43 am

    It may be useful to note that Hu’s remarks on this subject have become more frequent and more public since the managerial reorganization at PBoC moved her away from direct responsibility for SAFE’s investments. The new chap, Yi Gang, much less often quoted publicly, is understood to be significantly less concerned about dollar diversification and yield than Hu.

    You can read into that what you like and I’ve no doubt that China would be an interested participant in an experimental supra-sovereign investing scheme. However, in China as elsewhere, the chap whose beliefs are most closely aligned with his superiors’ is the one who usually has his hands on the cash.

  3. 4 Ashby Monk September 24, 2009 at 12:51 pm


  1. 1 SWFs Bringing Countries Together « Oxford SWF Project Trackback on December 10, 2009 at 4:00 pm

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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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