The so-called "sovereign wealth funds": regulatory issues, financial stability and prudential supervision

This paper studies the regulatory issues related to the “Sovereign Wealth Funds†(SWFs), described as “special purpose†government investment vehicles. Concerns have been expressed due to SWFs limited disclosure and transparency and their multiple investment objectives. While the risk of a political/strategic bias should not be underestimated, this paper argues that at present a specific regulation of SWFs may not be needed, as their asset management is already constrained by many regulatory, economic and political factors. With specific reference to legal aspects, this paper proposes that a balanced and proportionate regulatory approach to SWFs issues may just require, for the time being, to complement “soft law†instruments with a “light†and “indirect†regulatory and supervisory framework for SWFs equity investments.