Sovereign Wealth Funds: An Assessment

Abstract

High oil prices and impressive economic performance in emerging markets have led to the accumulation of massive financial assets. These nations have created sovereign wealth funds (SWFs) to manage their growing assets. SWFs have provided significant liquidity to American and European financial institutions. The rise of SWFs in number and size has raised concern about their objectives and strategies. This study examines the role these state-owned funds play in the global markets and the efforts to regulate their activities. I argue that capital exporting and importing nations share common interests and reciprocal responsibility in ensuring global financial prosperity. © 2010 London School of Economics and Political Science and John Wiley & Sons Ltd.