Santiso, Capapé and Guerrero: Sovereign Wealth Funds – A Growing Financial Firepower

From the chapter:

In his 2011 book How to Run the World, global strategist Parag Khanna looks at the state of the global economy and international relations, describing the “Next Renaissance” as “a future of mixed economies, and the blurring of the line between all things public and private.” Whereas Adam Smith’s The Wealth of Nations revolutionized economic thought and introduced notions on limited government intervention in the economy, context and interest have since proven to be better determinants of government intervention than theory. While working for State Street, Andrew Rozanov was the first to coin in
his 2005 article “Who Holds the Wealth of Nations”) the term “sovereign wealth fund” (hereinafter, SWF), seeking to differentiate and delineate a new breed of state-owned funds from traditional central bank reserves in foreign currency. The state is back in the economic arena – and stronger than ever.

Swiss central banker Philipp Hildebrand argues that the French Caisse des Dépots et Consignations (founded in 1816), an independent investment vehicle designed to manage government savings and pensions, was the first actual sovereign wealth fund. General consensus, however, places the Kuwait Investment Authority (founded in 1953) as the first of the more modern and active kind of SWFs. What, then, is a sovereign wealth fund? Research interest in the field is less than a decade old, and due to their pragmatic or even customized nature, no two sovereign wealth funds are the same. Nevertheless, a list of common characteristics can be observed.

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