SWFs 'to announce new guidelines'

5 September 2008

New guidelines for government-backed investment vehicles have been set at a meeting in Santiago, Chile.

Representatives of 26 sovereign wealth funds (SWF) agreed after two days of talks that a new trade body should be convened in order to represent themselves to other governments, the Times reports.

The funds, some of the largest of which can be found in oil-rich Gulf states, have been active over the past year as the credit crunch has frozen bank lending and hit the revenues of financial firms.

SWFs have bought stakes in Western banking giants including Citigroup and UBS.

However, the instruments' financial muscle - with $60 billion invested by them in the banking system over the past 12 months - has caused concern, with some politicians questioning their accountability.

It is hoped that these will be alleviated by the formation of the new body.

The guidelines are to be unveiled at a meeting of the International Monetary Fund (IMF) next month.

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