Sovereign Wealth Funds

The Times has an interesting article on emerging Bush administration efforts to encourage global codes of conduct to govern the activities of so-called sovereign wealth funds. These funds, which are government controlled funds, are estimated to control about $2.5 trillion in assets. They purchase a range of fixed assets, including real estate and companies--thus transforming financial and somewhat liquid assets into fixed investments. As many of the funds come from holdings of U.S. treasury notes, these transactions also reduce foreign holdings of U.S. government debt.

Apparently, some administration officials worry that these government-controlled investment funds are insufficiently transparent given the size of the assets they control. Hence, they are pressuring the IMF and World Bank to develop codes of conduct to encourage greater transparency in the funds' investment decisions.