Saudi Arabia Looks to Formalize Reserve-Like Sovereign Wealth Fund
The Saudi Arabian Monetary Agency (SAMA) manages hundreds of billions of dollars in foreign currency reserves. The Kingdom of Saudi Arabia is seeking to formalize a sovereign wealth fund. The proposed fund, National Reserve Fund, will be discussed by the Majlis as-Shura, the consultative assembly of Saudi Arabia. The draft law is under debate. The National Reserve Fund could start with initial capital worth 30% of budgetary surpluses amassed over a number of years.
Increasingly, Middle East central banks with massive foreign reserves are looking to the Chinese yuan as a potential diversifier. SAMA thinks the yuan is far from being a reserve currency, but it is getting stronger. In fact, China is Saudi Arabia’s largest crude buyer, giving 1.17 million barrels of oil per day. Beijing has been active setting up open currency swap agreements with central banks globally.
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