Nikkei on the Soverign Wealth Fund idea

July 9, 2007
By Ken Worsley

Back on Sunday, we posted a report on Stephen’s Jen’s recent piece at the Morgan Stanley Global Economic Forum on Japan’s need to establish a sovereign wealth fund. Jen makes a compelling case for why Japan needs to consider moving its foreign reserves into a broader asset base, and holds that Japan can get by with a slimmed-down $225 billion foreign reserve.

For those who have a Nikkei subscription, the newspaper picked up the issue in today’s edition, and reported on Jen’s recent commentary (oddly, without naming him directly). The Nikkei seemed a tad slanted to the Ministry of Finance’s point of view on this issue, stressing the risks involved and the International Monetary Fund’s worries that government investment in the private sector (cough…China and Russia…cough) tends to be opaque at times.

The Nikkei points out that globally, such state-run funds control an estimated $2.5 trillion worth of assets, and could reach 9% of global assets within the next decade.

In a separate piece published just a few hours ago, the Nikkei goes into more detail on the issues facing Japan’s leadership as they ponder the question of what to do with the nation’s vast foreign reserves.

Filed Under Foreign reserves, Monetary Policy