Commentary Type

More Transparency Needed: Making Official Holdings More Open


One of any government’s major responsibilities is managing the country’s international assets. How well it discharges this role has profound economic and political implications. Reforms are urgently needed to enhance the domestic and international transparency and accountability for this activity – in the interests of a better-functioning world economy.

Total end-2013 cross-border investments can be conservatively estimated at about $130tn. However, the share of government-owned or government-controlled cross-border investments in that total is unknown. These investments include those of government pension funds, government-owned banks, development banks and state-owned enterprises as well as international reserves and sovereign wealth funds (SWFs). We know little about the location, asset categories, instruments, and currency composition of these investments.

A conservative guess for the total volume of the assets of or controlled by governments is $35tn, about 25% of total cross-border assets, close to 50% of global gross domestic product at current prices and exchange rates. Most analysis is concentrated on an important but narrower category of official asset managers – central banks and SWFs. As of end-2013, international reserves were $13.4tn, including gold at the market price. Adding the international assets of SWFs, about $4.0tn, and adjusting for double counting, produces a total for these two broad categories of institutions of $16.2tn or 22% of global GDP. On a conservative estimate, this figure accounts for less than half of all assets held by Global Public Investors.

In the wake of the 1994-95 Mexican financial crisis, International Monetary Fund members agreed to establish the General and Special Data Dissemination Standards (GDDS and SDDS). These standards promote the quality of national economic and financial statistics. This initiative introduced more transparency and accountability in national authorities’ practices vis-à-vis their own citizens as well as the rest of the world, in particular the investor community.

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