Sovereign wealth funds. International Finance Essay

Sovereign riches cash. International Finance - Essay ExampleThese funds management is separated from official management of exotic currency reserve. The aim of SWFs among others is to manage government wealth so that funds do not remain static thus balancing investment with savings. The SWFs as a government-based investment strategy may involve the buying of sh ares in profit making placement or the taking over of a foreign based company, foreign direct investment, purchase of stake in financial firms, long-term government bond amongst others. This process has resulted in a well recognise trend in monetary trade, foreign currency policy, and new international finance strategies. But, much repugn subsists on the legitimacy of these policies and their ethical parameters. There are considerable economic and social issues associated to fairness of emulation and possible political non-commercial hidden agenda, which come to the surface seriously. Various institutions are starting to feel greatly concerned by the issue of SWFs especially because these investments are taking considerable proportions.While many countries are facing important turnabouts and recession in their economy others are continuously sustaining their considerable economic rise. or so major states are facing recurrent financial crises due to external parameters which are out of their subordination for instance the oil crisis, financial globalization which results in accumulation of wealth in term of foreign currencies and financial asset by some countries. While there was the 800 billion U.S dollars deficit in 1996 in the United States current account, export-oriented economies of South East Asian countries were enjoying incessant growth. It is universally recognise thus, that the subsequent rise in SWFs is a result of large global macroeconomic impairment and imbalances.These major discrepancies have resulted in some countries possessing high relative ratio of foreign currency reserve which has boosted intimately the event sovereign wealth