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US Treasury Assistant Secretary Lowery presented four guiding policy principles as a framework for multilaterally-agreed best practices for sovereign wealth funds. “If sovereign wealth funds are not going away, then we must work to ensure their smooth integration into the international financial system”, he said.
The four principles are:
- Sovereign wealth fund investment decisions should be based solely on economic grounds, rather than political or foreign policy considerations. Sovereign wealth funds should make this statement a formal part of their basic investment management policies.
- Sovereign wealth funds should be transparent about their investment policies and have strong risk-management systems, governance structures, and internal controls.
- Sovereign wealth funds should be careful not to be seen as having an unfair advantage in competing with the private sector for transactions, including by financing acquisitions at below-market rates.
- Sovereign wealth funds should comply with and be subject to all applicable regulatory and disclosure requirements of the countries in which they invest.
“We are also encouraging the OECD to identify investment policy best practices for countries that receive foreign government-controlled investment, including from sovereign wealth funds”, he said.