Impact and implications of sovereign wealth funds in internaional finance market

摘要

Over the recent period, many emerging market economies and commodity-exporting nations are accumulating unprecedented amounts of foreign exchange reserves. The management of these foreign reserves has led to the emergence of sovereign wealth fund. Our particular focus will be on exploring whether the investment activities of these sovereign wealth funds were conducive or inimical to financial stability. Also, what are some of the other important implications of the investments of these funds in terms of asset prices, exchange rate movements and emerging new international financial architecture? By outlining sovereign wealth funds possible impact on international financial stability, we conclude that sovereign wealth funds are long-term investors who can play a stabilizing role in financial markets by supplying liquidity and reducing market volatility. Sovereign wealth funds are also contributing to the gradual unwinding of global imbalances as they gradually diversify their portfolios.