IMF to boost transparency of sovereign wealth funds

IMF to boost transparency of sovereign wealth funds

Tuesday, 25 March 2008, 07:04 Hrs
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Washington: The International Monetary Fund has announced that it would adopt measures to boost the transparency of sovereign wealth funds (SWFs) in view of their increasing financial influence.

A sovereign wealth fund is a state-owned fund composed of financial assets such as stocks, bonds, property or other financial instruments.

Currently, 36 countries or regions have SWFs, with assets worth some $2.5 trillion under their management, according to a report by Standard Chartered.

A number of funds holding big stakes in major corporations across the world have come to assume a great influence on the financial market.

The accumulated funds may have their origin in, or may represent foreign currency deposits, gold, IMF reserve position held by central banks and monetary authorities, along with other national assets such as pension investments, oil funds, or other industrial and financial holdings.

"Official and private commentators have expressed concern about the transparency of SWFs, including their size and their investment strategies, " said an IMF staff paper released to the media Friday.

This has also sparked fears on the part of the funds themselves about potential protectionist barriers that might be erected by some governments, which could hamper their investments, the paper said.

Therefore, IMF officials are planning to develop a blueprint of best practices for government-run investment funds.

The staff paper suggested that a set of principles and practices could be presented to the IMF's board of directors for review ahead of its annual meetings in October.
Source: IANS
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