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US President Donald J Trump has signed an executive order directing the creation of a US sovereign wealth fund (SWF), a move designed to maximise the long-term stewardship of the nation’s wealth and ensure greater fiscal sustainability.
The creation of a SWF is seen as a key step in enhancing the US’ financial standing, enabling the government to leverage its extensive national assets for greater economic benefit.
President Trump highlighted the potential for such a fund to promote fiscal sustainability, reduce the tax burden on American families and small businesses, and enhance the country’s economic security.
Creation of the SWF aligns with the economic vision
Sovereign wealth funds are established by countries around the world to invest national assets and generate financial returns.
These funds are often used to support long-term goals, including economic security and strategic growth. The US, with its vast holdings of highly valued assets, including $5.7tn in government-controlled assets, stands to benefit significantly from a similar approach.
The country’s indirect asset holdings, including natural resource reserves, further amplify the potential size and impact of the fund.
“The US holds a wealth of resources that can be leveraged to create sustainable wealth for future generations,” President Trump said in a statement.
“A US sovereign wealth fund will provide an opportunity to maximise the financial returns on these assets and support America’s long-term economic goals.”
President Trump’s economic policies, which emphasise fair trade, energy dominance, and regulatory reforms aimed at spurring growth, are expected to further boost the US government’s wealth. These policies, he argued, would provide a robust foundation for the sovereign wealth fund’s success.
A number of countries around the world maintain sovereign wealth funds, with the UK recently announcing plans to establish its fund.
In addition to global examples, the US is not alone in its interest. Twenty-three states within the country already maintain their funds, collectively managing $332bn in assets.
These state-level funds demonstrate the effectiveness of leveraging public assets for long-term wealth generation, underscoring the potential for a national fund on a much larger scale.
“The creation of a US SWF will help ensure that America remains a global leader in economic strength and strategic influence,” President Trump added. “This is a critical step in securing long-term growth and stability for the American people.”
Next steps for fund development
Under the executive order, the Treasury and Commerce Departments are tasked with delivering a full plan for the sovereign wealth fund within 90 days.
The plan will also involve collaboration with the director of the Office of Management and Budget and the assistant to the President for Economic Policy, who will work together to outline the details of the fund’s structure, funding mechanisms, investment strategies, and governance model.
This plan will detail funding mechanisms, investment strategies, and the governance framework for the fund, setting the stage for the US to capitalise on its wealth in a way that aligns with the nation’s long-term economic and strategic interests.
With support for fiscal sustainability and national endeavours, the sovereign wealth fund is positioned as a key tool in advancing Trump’s vision for a stronger, more resilient US economy.
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