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January 25, 2008

WORLD ECONOMIC FORUM: GROWTH OF SOVEREIGN WEALTH FUNDS SEEN AS POSITIVE DEVELOPMENT

WORLD ECONOMIC FORUM

Photo: Philip Yea, Chief Executive, 3i Group, United Kingdom, captured during the session 'Private Equity and Hedge Funds - Friend or Foe?' at the Annual Meeting 2008 of the World Economic Forum at the Swiss Alpine High School in Davos, Switzerland, January 24, 2008. (Copyright by World Economic Forum. Photo by Annette Boutellier)


WORLD ECONOMIC FORUM

Photo: Henry A. Kissinger (R), Chairman, Kissinger Associates, USA; Co-Chair of the World Economic Forum Annual Meeting 2008, and Shimon Peres, President of Israel, captured during the session 'Orchestrating a New Concert of Powers' at the Annual Meeting 2008 of the World Economic Forum in Davos, Switzerland, January 24, 2008. (Copyright by World Economic Forum. Photo by Annette Boutellier)


WORLD ECONOMIC FORUM

Photo: Sir Martin Sorrell, Group Chief Executive, WPP, United Kingdom, captured during the session 'Rebuilding Brand America: Five Suggestions for the Future President' at the Annual Meeting 2008 of the World Economic Forum in Davos, Switzerland, January 24, 2008. (Copyright by World Economic Forum. Photo by Remy Steinegger)


WORLD ECONOMIC FORUM

Photos: William H. Gates III, Chairman, Microsoft Corporation, USA, captured during the session 'A New Approach to Capitalism in the 21st Century' at the Annual Meeting 2008 of the World Economic Forum in Davos, Switzerland, January 24, 2008. (Copyright by World Economic Forum. Photo by Remy Steinegger)


WORLD ECONOMIC FORUM

Photo: Rupert Murdoch, Chairman and Chief Executive Officer, News Corporation, USA captured during the session 'Rebuilding Brand America: Five Suggestions for the Future President' at the Annual Meeting 2008 of the World Economic Forum in Davos, Switzerland, January 24, 2008. (Copyright by World Economic Forum. Photo by Remy Steinegger)


WORLD ECONOMIC FORUM

Photo: Emma Thompson, Actor and Writer, United Kingdom, expresses her thoughts during the session 'Future Shifts: The Voice of the Next Generation' at the Annual Meeting 2008 of the World Economic Forum in Davos, Switzerland, January 24, 2008. (Copyright by World Economic Forum. Photo by Monika Flueckiger)


WORLD ECONOMIC FORUM

Photo: Tzipi Livni, Vice-Prime Minister and Minister of Foreign Affairs of Israel, addresses the audience during the session 'Middle East: After Annapolis, After Paris' at the Annual Meeting 2008 of the World Economic Forum in Davos, Switzerland, January 24, 2008. (Copyright by World Economic Forum. Photo by Andy Mettler)


Davos, Switzerland, 24 January 2008 - The growing financial clout of sovereign wealth funds (SWFs) - government-controlled vehicles created to invest the foreign currency reserves of many major oil producers and other exporters - should be welcomed, not opposed, by global policy-makers, panellists at the World Economic Forum Annual Meeting 2008 agreed today.

The rising importance of these funds - as seen by their recent investments in troubled financial institutions in the US and Europe - has attracted widespread media attention, fuelling public concern about their potential political influence. Yet, for the most part, these fears bear no relation to the funds' actual behaviour. "These are among the most professional investors in the world," noted Stephen A. Schwarzman, Chairman and Chief Executive Officer, The Blackstone Group, USA. "In our experience, there is virtually no difference between going to a sovereign fund [for investment capital] and going to a state pension fund in the US."

Schwarzman was speaking at a panel session entitled "Myths and Realities of Sovereign Wealth Funds". The panel also included fund managers from Kuwait and Norway, key government officials from the US, Russia and Saudi Arabia, and a noted economist and former US Treasury Secretary. For the most part, these participants agreed that the SWFs represent a valuable pool of stable, long-term capital, and have reduced, rather than increased, capital market volatility.

The need for standards cuts both ways, argued Robert M. Kimmitt, US Deputy Secretary of the Treasury. Recipient countries need to make it clear that they will not block investments from foreign sources, including the SWFs, merely on political grounds. G7 leaders, he noted, have asked the International Monetary Fund and the World Bank to work with both sovereign investors and recipients of that investment to develop voluntary guidelines. Drafts of these standards should be ready for review by the autumn IMF/World Bank meetings, he said. |GlobalGiants.com|


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