UAE. Restrictions by the United States and others may lead sovereign wealth funds to invest closer to home instead of in the West, the head of the central bank for the United Arab Emirates was quoted as saying on Thursday.
According to a document in bullet-point form quoting UAE central bank governor Sultan Nasser al-Suweidi, such a scenario would trigger a "a new regional developmental cycle" in the Middle East.
"Regulations regarding SWF might lead to ... fund becoming more passive investment vehicle or change direction of investment flows," according to the document, presented at a Japanese business conference held in Dubai.
Sovereign wealth funds such as the UAE's Abu Dhabi Investment Authority (ADIA), the world's biggest, have poured billions of dollars into ailing banks and firms in the industrialised economies in recent years.
Analysts estimate that ADIA has around US$300 billion in assets.
US Treasury officials have been analyzing sovereign wealth funds more closely of late due to their mounting investment clout, especially as Wall Street endures one of its worst financial crunches in decades.
The International Monetary Fund also signaled earlier this year that it was ratcheting up its scrutiny of sovereign wealth funds due to their rapidly growing financial clout.
IMF officials are considering voluntary best practices for the government-run investment funds which straddle international markets and control estimated assets of between two and three trillion dollars.