The European Commission will propose a common approach to sovereign funds later this week, commission president Jose Manuel Barroso said on Monday, while ruling out the possibility of legislation.
"Sovereign wealth funds offer opportunities. They are not a bigbad wolf at the door," Barroso said in a statement.
The current financial turmoil shows that sovereign wealth fundscan help stabilize financial markets, he added.
Stressing that the European Union (EU) should remain open to sovereign wealth funds, which are now managing vast assets up to two and half trillion U.S. dollars, Barroso said there are real concerns over some aspects of the way some funds based outside Europe operate.
"Europe-based public and private investment funds are subject to stringent rules on governance and disclosure. We cannot allow non-European funds to be run in an opaque manner or used as an implement of geo-political strategy," he warned.
As a response, Barroso said the commission, the EU's executive arm, was scheduled to bring forward proposals to address these concerns on Wednesday, which would then be discussed by EU leaders when they meet in March.
"We will propose a common approach at European level, avoiding distorting the single market with incompatible national responses," he said.
However, Barroso said the proposals would be in principle a voluntary code of conduct, rather than European legislation.
"We will be proposing a cooperative effort between recipient countries and sovereign wealth funds and their sponsor countries to establish a set of principles for transparency, predictability and accountability," he said.
Currently, the International Monetary Fund (IMF) is trying to set up a global code of conduct for sovereign wealth funds and their owners. Barroso said the EU approach could serve as a contribution to the IMF efforts.
Barroso, who was visiting Norway Monday, said the Norwegian sovereign wealth fund is exemplary in terms of transparency, governance and accountability and he hoped others could follow.
Source: Xinhua
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