A step in the right direction

Clarity and transparency in global finance is always welcome. More so with the backdrop of the continuing credit crisis, with various financial institutions being rescued by sovereign wealth funds (SWFs).

News of SWFs producing a set of voluntary investment principles that will not damage their financial interests but diffuse concerns of recipient governments is welcome. It is aimed at demonstrating that the funds have no political or strategic intentions but are intended to benefit all the involved parties.

In the past year sovereign wealth funds from Abu Dhabi to Beijing, from Russia to Kuwait, have gained prominence. One of which particular notice was taken was the $7.5 billion investment of a 4.9 per cent stake in Citigroup by Abu Dhabi Investment Authority. The result of which was the "protectionist" rhetoric of the Western governments became shriller.

An agreed commitment to avoid political agendas, without making disclosures that would put them at a competitive disadvantage will ensure their important role in the global economy continues.

The International Working Group of SWFs, co-chaired by Abu Dhabi, should be lauded. It is hoped that ultimately all SWFs will come on board and sign the agreement.