Morgan Stanley - A US$100 Billion Supra-Sovereign Wealth Fund?

"The IMF has been asked by the G7 to come up with a set of best-practice guidelines for the sovereign wealth funds (SWFs). The irony here is that we believe the IMF itself should invest its capital more like a SWF (and more like a central bank). The IMF has one of the largest gold holdings in the world. At today’s gold prices, the 103.4 million ounces of gold that the IMF holds is worth close to US$92 billion. Arguably, this is a good time to convert its gold holdings into paper assets, for not only are gold prices high, but the IMF now also has a genuine need to generate investment income."

"In our view, the IMF possesses one of the most talented pools of economists in the world, produces top research on both developed and developing economies and still enjoys great credibility in the world. While sensible rationalisation from time to time is always welcome and justified, the ability of the IMF to operate at its full potential should never be compromised, in our view. Retrenching now is tantamount to downsizing a fire department when there is a low incidence of fire. Further, downsizing now when the global economy is down-shifting and with new and daunting policy challenges (lingering inflation, financial regulation, cross-border investment, etc.) confronting both developed and developing countries means that the timing may not be ideal."

[Read More:Morgan Stanley - Global Economic Forum]