The impact of sovereign wealth funds on global financial markets

  title={The impact of sovereign wealth funds on global financial markets},
  author={Roland Beck and Michael Fidora},
If sovereign wealth funds act similarly to private investors and thus allocate foreign assets according to market capitalisation rather than liquidity considerations, official portfolios reduce their “bias” towards the major reserve currencies — the US dollar and the euro. As a result, more capital flows “downhill“ from rich to less wealthy economies. In this scenario, the euro area and the United States would be subject to net capital outflows while Japan and the emerging markets would attract… Expand
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