## IMF Survey: Wealth Funds' Long-Term View May Help Stabilize Markets

_IMF News, October 16, 2008_

## Source details

**Canonical URL:** [IMF Survey: Wealth Funds' Long-Term View May Help Stabilize Markets](https://www.imf.org/en/news/articles/2015/09/28/04/53/soint101608a)

## Other formats

- [Markdown version](/en/news/articles/2015/09/28/04/53/soint101608a/index.md)
- [Structured JSON version](/en/news/articles/2015/09/28/04/53/soint101608a/index.json)
- [Bundle manifest](/en/news/articles/2015/09/28/04/53/soint101608a/bundle-manifest.json)

## Bibliographic details
- Published: October 16, 2008

---

### Publication and context
- IMF Survey online interview published October 16, 2008.
- Interviewee: IWG co-Chair Hamad Al Suwaidi, conducted during the 2008 IMF-World Bank Annual Meetings in Washington, D.C.
- The International Working Group of Sovereign Wealth Funds (IWG) published October 11 a set of 24 voluntary principles—dubbed the Santiago Principles—designed to ensure an open international investment environment.
- The IWG was established to meet the request from the IMFC at its 2008 Spring meeting to draft a set of principles; that drafting task ends with the publication of the Santiago Principles.

### Key findings and analysis
- Purpose and expected effects of the Santiago Principles:
  - Publication of the Santiago Principles will enhance understanding of the way in which SWFs (sovereign wealth funds) operate.
  - Given the voluntary commitment and drafting effort by SWFs, participants are expected to publicly endorse the principles.
- Compliance and monitoring:
  - Some of the principles call for certain information to be disclosed, making nonimplementation or noncompliance apparent in a short period of time.
  - Some SWFs have decided to use independent third parties to confirm compliance with the Santiago Principles.
  - The IWG is considering the establishment of a permanent representative body for SWFs; part of that body's role would include discussion of implementation of the principles.
- Stability and investment behavior of SWFs:
  - SWFs typically take a long-term view on their investments and are seen by some commentators as shock-absorbers in volatile markets.
  - One of the main principles of SWFs is to invest on an economic and financial risk-and-return basis.
  - By law these funds will not be able to get involved in noncommercial activity.
  - The global crisis that was occurring at the time presents "excellent investment opportunities" and, given the long-term nature of these funds, some have taken advantage of these opportunities.
  - Because of their long-term approach, SWFs could find investment options that would add to the stability of markets.
  - "By their very nature, SWFs have a big stake in stable global financial markets."

### Institutional development and host-country relations
- Creation of a standing group / permanent international body:
  - The IWG started examining the creation of a permanent international body to represent sovereign wealth funds.
  - The proposed standing group's purpose is to be defined by a formation committee; when terms of reference are set, the body would function more as a forum for interaction than merely an editor of the principles.
  - The new permanent body for SWFs would be a focal point of contact between wealth funds and recipient countries.
- Coordination with other organizations:
  - The IWG is aware of OECD work in this direction and has synchronized activities with the OECD; the IWG and OECD are described as "two sides of the same coin" on this issue.
  - The Santiago Principles are seen as building trust further between host countries and SWFs, with an expectation of a positive reaction from host countries.

### Operational implications and next steps
- Monitoring and adjustment:
  - The IWG will monitor the appropriateness of the principles going forward and make adjustments where necessary.
  - The formation committee will consider establishment details and terms of reference for a standing group to review the principles and consider other issues.
- Practical measures taken by SWFs:
  - Use of independent third parties by some SWFs to confirm compliance with the Santiago Principles.

*IMF Survey online interview with IWG co-Chair Hamad Al Suwaidi, October 16, 2008.*

---

## Content in this bundle

- [022908pdf (PDF)](/-/media/websites/imf/imported/external/np/pp/eng/2008/_022908pdf.pdf){rel="external" type="application/pdf"}

---

## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Survey Interview](https://www.imf.org/en/news/search)
- [Wealth funds post principles](https://www.imf.org/external/pubs/ft/survey/so/2008/NEW101508B.htm)
- [Pact on voluntary principles](https://www.imf.org/external/pubs/ft/survey/so/2008/NEW090308B.htm)
- [IMF work on wealth funds](https://www.imf.org/external/pubs/ft/survey/so/2008/POL03408A.htm)
- [IMF Board on wealth funds](https://www.imf.org/external/pubs/ft/survey/so/2008/NEW032108A.htm)
- [Norway's model wealth fund](https://www.imf.org/external/pubs/ft/survey/so/2008/POL070908A.htm)
- [Rise of sovereign funds](https://www.imf.org/external/pubs/ft/fandd/2007/09/straight.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/soint101608a_