On February 3, local time, U.S. President Trump signed an executive order instructing government officials to establish a sovereign wealth fund. The specifics of how the fund will operate and finance are unclear.
Announcing the move at the White House on the same day, Trump said the U.S. has “tremendous potential” and has appointed Treasury Secretary Scott Bessant and Commerce Secretary nominee Howard Lutnick to lead the process of building a sovereign wealth fund.
During the election campaign, Trump proposed to emulate the model of sovereign wealth funds in Norway, Saudi Arabia and other countries, and convert national resources, such as energy revenues, into long-term investment capital.
Bessant noted that the sovereign wealth fund would be established in the next 12 months, calling it a “strategically significant” issue.
The text of the executive order signed by Mr. Trump has not been made public, and it is unclear where the funds will come from, while Mr. Trump has pledged to build “the world’s largest sovereign wealth fund.”
Mr. Trump first floated the idea in a speech at the Economic Club of New York last September, injecting tariff revenues into a sovereign wealth fund to invest in manufacturing centers, defense and medical research.
Trump said at the time: “We will create America’s own sovereign wealth fund and benefit all Americans.” He then mentioned that Wall Street and business leaders can play a role in helping to “provide investment advice.”
Sovereign wealth funds are typically found in countries with large foreign exchange reserves or commodity income, such as Norway and Saudi Arabia, and invest in everything from stocks and bonds to infrastructure and technology.
At present, the world’s largest sovereign wealth fund is the Norwegian government pension fund (about $1.8 trillion), and if Trump wants to surpass it, it needs at least a trillion dollars of initial capital. But the lack of a steady stream of natural resource revenues similar to Norway’s in the United States will hardly be achievable in the short term.
In reality, there is no sovereign wealth fund at the federal level, but 20 states have similar funds funded by energy or land revenues, such as the Alaska Permanent Fund and the North Dakota Legacy Fund. Trump’s proposal, if realized, would be the first attempt by the United States to establish a state-level sovereign fund.
It is worth noting that there is speculation that the sovereign wealth fund is intended to build up bitcoin reserves, and there are analysts who believe that Trump will use the funds to buy Greenland.
Trump's order to set up a U.S. sovereign wealth fund has sparked speculation in the market
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