The Theory Of Sovereign Wealth Funds Of Multilateral Regulation

In recent years, influenced by the financial crisis and the structural imbalances ofinternational economy, sovereign wealth funds develop very fast on both numbers andsize. The scope and influence of their investments have been greatly expanded.However, due to the close relation between the government and sovereign wealthfunds, many recipient countries worry about that the sovereign wealth funds may becontrolled by their government and focus on some political purposes, thoseinvestments may threaten their national security and financial order. Thus,"financialprotectionism" rises and many countries have taken measures to restrict theinvestment of sovereign wealth funds. It created a significant obstacle to sovereignwealth funds’ investment and also had a negative impact on the world economy. Atthe same time, sovereign wealth funds have many interior problems, such asnon-transparent and ambiguity of power and duties. And the doubt has been deepenedafter the establishment of sovereign wealth funds of Russia and China.Based on the above consideration, how to create a system, which could bothprevent the overregulation of SWFs and increase the security of SWFs’ investmentsbecome very important. To solve this problem, the International Monetary Fund (IMF)and OECD (OECD) developed their own measures---"Santiago Principles" and"OECD Declaration"."Santiago Principles" and "OECD Declaration" have made ahuge success, they effectively avoided the unilateral surveillance and show a brightfuture for both sovereign wealth funds and the recipient countries.