Magazine article Global Finance

Sovereign Funds Eye Santiago Principles

Magazine article Global Finance

Sovereign Funds Eye Santiago Principles

Article excerpt

GLOBAL

The International Working Group (IWG) of 26 member countries of the International Monetary Fund last month released a statement of Generally Accepted Principles and Practices, or GAPP, for sovereign wealth funds. With some $3 trillion in assets, SWFs comprise a major source of liquidity for the global financial system.

Known as the Santiago Principles, after the capital of Chile, where agreement on the text was reached, the accord could provide a framework for good governance and transparency for SWFs, while helping to fend off protectionism by governments of countries where investment targets are based. The proof will be in the pudding, however, and it remains to be seen how many of the funds will actually sign up for and implement the principles.

"Though some of the funds have been operating quiedy for decades, their sudden rise to prominence over the past 18 months has fueled some anxiety in the West about the possibility that their investments could have a political as well as a financial dimension," says Jerry Leamon, global services leader at Deloitte Touche Tohmatsu. …

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