Donald Trump Orders Start of a Sovereign Wealth Fund: What to KnowPresident Donald Trump on Monday signed an executive order directing the U.S. Treasury and Commerce departments to establish a sovereign wealth fund.
Why It Matters
Trump indicated that the fund could potentially be used to purchase TikTok, the popular social media app that was briefly taken offline on January 19 before a law took effect mandating that its parent company, Bytedance, divest from it or face a ban.
Critics argued that banning the app would disrupt the creator economy and disproportionately affect small businesses that have reaped economic benefits from the platform. Ban proponents raised national security concerns. The fund could present an alternative to keep the app open while addressing those concerns.
What Is A Sovereign Wealth Fund?
A sovereign wealth fund (SWF) is a state-owned investment fund composed of assets such as stocks, bonds, real estate or other financial instruments. The funds are typically established by governments to achieve specific economic objectives and are often generated from budgetary surpluses, foreign currency operations, proceeds from privatizations, governmental transfer payments and revenue generated from resource exports.
Key characteristics and purposes of sovereign wealth funds:
Stabilization Fund: To insulate the national budget and economy from commodity price swings or economic shocks.
Savings Fund: To build wealth over the long term, particularly for future generations.
Pension Reserve Fund: To cover future pension liabilities and ensure long-term fiscal health.
Development Fund: To fund social and economic development projects like infrastructure or education.
Strategic Investment Fund: To influence or acquire strategic assets that can benefit national interests.
Examples of prominent sovereign wealth funds include Norway's Government Pension Fund Global, Abu Dhabi Investment Authority and China's China Investment Corporation.........
https://www.newsweek.com/trump-sovereign-wealth-fund-tik-tok-executive-order-2025391