Sovereign Wealth Funds

[Guest Congressman Jim Moran]

Sovereign Wealth Funds (SWFs) are state-controlled investment vehicles typically funded through revenues from oil and natural gas profits. With $2.2 trillion in currency reserves, sovereign wealth funds are poised to become the defining player in international finance. In the next decade, they are projected to grow to over $13.4 trillion, more than the value of the NY Stock Exchange.

 

Historically, these funds invested mainly in U.S. Treasury bills given their low-risk and steady returns. But as the dollar continues to decline, SWFs are increasingly turning away from these investments towards both the purchase of equity stakes in U.S. companies, like Citigroup, the Blackstone Group, and other foreign currencies. Because the U.S. economy is dependant on the purchase of our U.S. Treasury bills to pay for our deficit spending (China currently holds in excess of $1.5 trillion in U.S. debt), a shift away from U.S. investment by SWFs could have major implications for our economy.

 

Seven SWFs currently have over $100 billion in assets, including those based in Abu Dhabi, Singapore, Norway, Kuwait, China, and Russia. Many SWFs lack transparency making it difficult to determine how much money is involved, whose money it is and how these massive funds are being used.

 

With the U.S. boasting some of the most dynamic growth opportunities in the world, it is important that we understand and be on the leading edge of this profound financial, global transformation. And given the growing leverage these funds have over our economy, it is imperative we being focusing on this issue immediately in a bipartisan fashion -- the task force's main goal.

 

http://www.ft.com/cms/s/0/7f055ffa-e59e-11...00779fd2ac.html