Global Strategic Finance Initiative: Latest Articles

One of the major reasons why the current financial crisis is so threatening is the absence of what Tokyo-based investor Peter Tasker calls "strong hands"--long-term, patient, deep-pocketed investors that a teetering financial system needs to function in times of great uncertainty and stress. When Japan suffered its financial crisis in the 1990s, the strong hands that invested and kept the system afloat included private equity funds, insurance companies, and banks. But today, those financial actors are too leveraged, weak, or frightened to play a similar role. While… more

Monday's embrace of covered bonds by U.S. Treasury Secretary Henry Paulson and senior representatives of the Fed, the Federal Deposit Insurance Corp. and the country's largest banks to help thaw the U.S. mortgage market is a laudable step, appealing to market proponents and skeptics alike. Introducing covered bonds to the U.S. is a great idea. In fact, covered bonds can help more than just the mortgage market. At its most basic, a covered bond is a bond issued by a bank and backed by… more

Under pressure from the U.S., Europe and the IMF, representatives of 25 sovereign wealth funds managing about $3 trillion in assets met last week in Singapore to discuss how to allay fears about their investments. These large pools of government-controlled wealth are investing in everything from Barclays and Citigroup to New York's Chrysler Building. As they transcend traditional boundaries between foreign policy, financial markets and national security, it is natural that Western capitals are worried.

However, shining the spotlight too brightly on sovereign wealth funds (SWFs) may… more

When the adjectives most often used to describe you are "secretive," "opaque" and "mysterious," you've got an image problem. Such is the predicament of sovereign wealth funds, the government-controlled investment vehicles, often in authoritarian states, that have become the bane of Western politicians. Yesterday, the European Commission became the latest body to propose transparency guidelines for these funds.

But the good news for sovereign wealth funds is that increased disclosure and transparency may actually be a win-win for everyone. A little… more

Perhaps it's time to add the European Bank for Reconstruction and Development to that list of things that, like houseguests and fish, can overstay their welcome. The bank now strays so far from its original remit that it risks spoiling the legacy of its earlier successes. The EBRD should quit while ahead, declare victory and be privatized.

At its pinnacle, the EBRD was a triumph of financial statecraft. Established in 1990 with funding from the U.S., the EU and other governments,… more