The world’s largest sovereign wealth fund (SWF) as of December 2022 was China Investment Corporation (CIC), managing assets reaching around 1.35 trillion U.S. dollars. The CIC is used to manage a portion of China's foreign currency reserves and established in 2007.
What are sovereign wealth funds?
Sovereign wealth funds are state-owned and are comprised of a wide array of financial assets including stocks, bonds, real estate, precious metals, and other financial instruments. In the main, sovereign wealth funds are funded by foreign-exchange reserves, assets which are held by monetary authorities or central banks in the form of U.S. dollars and other leading world currencies as a way of backing liabilities.
Who holds the SWF?
A state’s central bank will generally hold the sovereign wealth fund; in the process of its management of a nations funds or banking system funds will be accumulated. These types of state fund are of major economic and fiscal importance, and may be implemented for different objectives: protect the economy against sudden shocks, hedge against the problem of an aging population, or to foster socio-economic development.
