Japan Wants A SWF

Ashby Monk

This just in:

“Japan’s ruling party unveiled an economic stimulus plan Wednesday totaling more than $57.6 billion that also calls for Japan to consider making use of its $1.07 trillion in foreign reserves to create a sovereign wealth fund…”

And why?

The plan’s chief architect, former trade minister Masayuki Naoshima, pointed to the need to get a greater return on Japan’s overseas investments. “We are thinking of how we can better employ Japan’s foreign reserves,” he said.

I’m actually surprised this didn’t happen earlier. With over a trillion dollars in forex reserves, a SWF akin to CIC or GIC would undoubtedly help in this regard.

However, there is apparently more to this proposed SWF than just reserve diversification and boosting returns; Japan may be planning to use the new SWF to make strategic investments in the resource industry. This is, if you remember, what India was proposing (and then later rejected).

Anyway, this development has the wires buzzing. For example, here’s Alphaville’s take:

“And that, we’d submit, is how you might end up transforming currency wars into resource wars in one fell swoop…”

I’ll be very interested to see some of the information that is undoubtedly forthcoming on this new fund. In my view, a reserve investment corporation makes sense for Japan, but the real intriguing bit will be to see the specific objectives the government gives the SWF. Fascinating stuff…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s




About

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.

RSS Feed

 RSS

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 369 other followers

Latest SWF News

Visitors Since August 2010


%d bloggers like this: