IMF Bluff?
Morgan Stanley’s Stephen Jen suggests the International Monetary Fund, to ease its financial woes, should start its own sovereign wealth fund. Given that the IMF is supra-national, Mr. Jen calls it a “Supra-Sovereign Wealth Fund,” and figures the IMF could put together $100 billion in assets.
How? The IMF could cash its 103.4 million ounces of gold, valued at about $92 billion now. Then it could use the proceeds to invest in different instruments. The IMF certainly could use a financial boost, given its precipitously declining loan portfolio and revenues.
“In our view, the IMF possesses one of the most talented pools of economist in the world,” says Mr. Jen, who wants to make sure they the pool remains deep. “Retrenching now is tantamount to downsizing a fire department when there is a low incidence of fire.” He figures the IMF could expect a 3.5% nominal return even if investments were limited to AAA bonds.
Interesting idea, certainly, but the longest of long shots, given the reluctance of the U.S. and other big holders to the IMF selling off any of its gold, let alone all of it. A 2007 report on IMF financing suggested selling about 10% of the gold, and that still hasn’t been accepted. –Bob Davis
WSJ |
