SOVEREIGN WEALTH FUNDS IN THE SYSTEM OF GLOBAL FINANCIAL IMBALANCES: AN ANALYSIS OF BENEFITS AND THREADS FROM THE PERSPECTIVE OF GLOBAL FINANCIAL STABILITY

Abstract

A new active component has appeared in the contemporary global financial system, Sovereign Wealth Funds, demonstrating the growing investment capacities in some countries. This newly born category of investors reflects a wide array of economic policy intentions in the realities when current consumption or investment of considerable funds resulting from budget surplus and positive payment balance becomes either undesirable or unfeasible. The article’s objective is to analyze operation of Sovereign Wealth Funds as an innovative and leading actor of the global financial market, coming in place of hedge funds and private investment funds and challenging the role of central banks as biggest lenders. The position of Sovereign wealth Funds in the system of global financial imbalances is studied; benefits and threats from their operation are analyzed from the perspective of global financial stability.