European Union finance ministers agreed on Tuesday that the 27-nation bloc should remain open to sovereign wealth funds, endorsing a voluntary code of conduct by the second half of the year.
"Sovereign wealth funds have played, still play and will play an important role," EU President Andrej Bajuk, Slovenia's finance minister, told a news conference after a meeting with his EU counterparts in Brussels.
He said that it was necessary to ensure that EU rules regarding free movement of capital were maintained considering such state-backed funds have contributed positively to the development of Europe and to the provision of liquidity during turbulences of financial markets.
"Maybe the fears are not well founded," Bajuk noted, referring to concerns of some his colleagues that sovereign wealth funds could make investment out of political motivations instead of commercial considerations.
Bajuk added that so far, there was no evidence of this kind.
Most EU finance ministers also supported a common EU approach rather than unilateral ways to cope with sovereign wealth funds.
"We should uphold traditional European rules -- investors are welcome but according to certain rules ... So now is the time to act before protectionist tendencies come to the fore in the sector," EU Economic and Monetary Affairs Commissioner Joaquin Almunia said.
They endorsed a global initiative to forge a voluntary code of conduct for such funds in the second half of the year to prevent such funds from being run in an opaque manner.
Sovereign wealth funds, referring to funds run by states, are now managing vast assets up to two and half trillion U.S. dollars.
At the end of last month EU Commission President Jose Manual 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.
If such a code of conduct failed, the European Commission, the executive arm of the EU, said it would move to legislate.
Source:Xinhua
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