size and influence of Sovereign wealth funds

[dimpy.handa]

Sovereign wealth funds (SWFs) have become very important players in the global economy. They are now so big that their activities can shift markets, leading to panic and instability when they sell assets suddenly. Their purchases can mean that companies owned by other states can end up dominating the economies of smaller countries, undermining their own sovereignty and economic independence. It is also worrying that many SWFs are controlled by undemocratic states which have a questionable commitment to capitalism; should we allow such states to exercise so much power over our economies?

 

[swatiraohnlu]

A sovereign wealth fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds invest globally. Some of them have grabbed attention making bad investments in several Wall Street financial firms including Citigroup, Morgan Stanley, and Merrill Lynch. These firms needed a cash infusion due to losses resulting from mismanagement and the subprime mortgage crisis. Most SWFs are funded by foreign exchange assets.