The European Commission on Wednesday launched discussions on how to make sovereign wealth funds (SWFs) more transparent as a means of increasing global financial stability, according to dpa. The European Union's executive said it would call on member states to promote a voluntary code of conduct, under which SWFs would vow to act in a more predictable, accountable and open manner. Such a code of conduct, to be discussed by EU government leaders at a March 13-14 summit in Brussels, would then be promoted by the International Monetary Fund. At a time of heightened financial instability, there are growing fears that some SWFs may use their vast financial power to exert political influence over other countries. "In Europe, we have had traditionally an open response to inward investment. And this will continue," said EU Internal Market and Services Commissioner Charlie McCreevy. "At the same time, we agree that it is not unreasonable that investors closely linked with national authorities or governments should follow some common principles on transparency and governance," he added. McCreevy said there was no need to introduce new legislation and insisted the code of conduct would be strictly voluntary. Joaquin Almunia, the EU's economic and monetary affairs commissioner, said that while most SWFs operated well, greater transparency would improve confidence in the recipient countries. SWFs are foreign-investment instruments which manage state savings and are composed of a variety of financial assets such as stocks, bonds and property. Because of the often secretive nature of such funds, accurate figures are difficult to come by, but their global worth is estimated at between 2.5 and 3 trillion dollars - and growing. The biggest SWF is thought to be the Abu Dhabi Investment Authority, which has been operating since 1976 and is believed to be managing assets worth 875 billion dollars. Norway, Singapore and many oil-exporting countries have SWFs, while Russia recently revealed that it had two.
