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Four Key Vatican Financial Reforms

Pope Francis recently announced plans to revamp the Vatican’s financial system, consolidating management and increasing transparency. The papacy issued a press release Monday outlining the restructuring process, which included four notable reforms.

1. Creation of a new Council for the Economy composed of 8 cardinals or bishops and 7 “lay experts of different nationalities with strong professional financial experience.”
2. Establishment of a new “Secretariat for the Economy” department headed by a cardinal prefect, which will report to the Council for the Economy.
3. Appointment of an auditor-general with the power “to conduct audits of any agency of the Holy See and Vatican City State at any time.”
4. The Administration of the Patrimony of the Apostolic See (APSA), the Vatican’s current real estate management arm, will become the Central Bank of the Vatican with “all the obligations and responsibilities of similar institutions around the world.”

The Secretariat of the Economy will preside over “all economic and administrative activities within the Holy See and the Vatican City State,” including human resources, financial planning, preparing an annual budget, and procurement. Pope Francis named Cardinal George Pell, the current Archbishop of Sydney, Australia, to the position of Prefect.

The Council for the Economy will convene regularly to discuss policies and practices to be implemented by the Secretariat. It will also prepare and analyze reports on the Holy See’s economic and administrative undertakings.

The pope’s announcement came after the conclusion of an extensive examination by the Pontifical Commission for Reference on the Organization of the Economic- Administrative Structure of the Holy See (COSEA). COSEA recommended, among other things, “the adoption of accounting standards and generally accepted financial management and reporting practices as well as enhanced internal controls, transparency and governance.” Pope Francis’ governance advisory council (8 cardinals) and the Holy See’s financial affairs committee (15 cardinals) endorsed COSEA’s recommendations.

“The changes will enable more formal involvement of senior and experienced experts in financial administration, planning and reporting and will ensure better use of resources, improving the support available for various programs, particularly our works with the poor and marginalized,” the Vatican said in the press release.

Institutional Investors Remain Skeptical as Bitcoin Continues to Rise

Bitcoin has continued to rally over the past month – hitting a record US$ 8,224 in the early hours of November 20 – and institutional investors are beginning to take notice of the cryptocurrency’s increasing popularity. With a market value of more than US$ 130 billion, the digital currency has seen unprecedented growth of over 700% over the past year. But Bitcoin’s rise has also been marked by a number of volatile slumps, leaving institutional investors divided over its durability as a long-term store of value and wondering whether to get in on the action. Despite these headwinds, more than 100 hedge funds have been formed to trade in digital currencies.

Split Consensus on Wall Street

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3 Reasons Why Other Sovereign Funds Will Not Dump Oil Stocks

Norges Bank informed the country’s ministry of finance to recommend the wealth fund to remove oil and gas listed equities from the fund’s benchmark index. The central bank came to the conclusion that Norway’s Government Pension Fund Global (GPFG) would be less vulnerable to a permanent drop in oil prices if the wealth fund was not invested in oil and gas listed equities. For some academics there are arguments that wealth funds should diversify away from their sources of wealth. Contradictory studies have demonstrated that wealth funds should support industries that enhance the country’s sources of wealth. For example, earlier on, Norway’s fossil fuel wealth was buoyed by increased capital investment to the oil sector to increase output, a pre-cursor to the wealth fund’s explosive growth.

1. Stock Performance
For some sovereign investors, investments in master limited partnership in oil and gas have been strong driver of returns, or even in smaller fossil fuel listed companies. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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GIC Financially Backs Innovation Precinct Project in Melbourne

Singapore’s GIC Private Limited acquired a majority interest in a joint project located in Melbourne, Australia. The joint project is between Sydney-based Lendlease, Australia-based Urbanest and GIC. In 2014, the project was labeled Carlton Connect Initiative with the goal of being an innovation hub.

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