EU in sovereign wealth fund call

Mr Almunia wants more transparency from the funds

Two of the European Union's main finance commissioners have said that controversial sovereign wealth funds need to improve their transparency.

State-run investment vehicles, Chinese and Middle East sovereign wealth funds have recently bought stakes in a number of Western banks and other businesses.

Such developments have raised some concerns about political interference.

EU Monetary Affairs Commissioner Joaquin Almunia said funds needed to be aware of their "responsibilities".

'Useful investment'

"Let us be clear, sovereign wealth funds offer a source of investment that has been useful recently to provide quick and rapid financing to large banks that faced liquidity problems," said Mr Almunia.

Let's be brutally frank about this, sovereign wealth funds have been positive and long-term investors EU Internal Market Commissioner Charlie McCreevy

"The big difference we see in the case of sovereign wealth funds is they are owned by the state, not by private firms, and their investment criteria and management are characterised, in some cases, by a high level of opacity.

"Sovereign wealth fund countries must acknowledge that their growing weight in global financial markets brings responsibilities."

Speaking at a joint press conference in Brussels, EU Internal Market Commissioner Charlie McCreevy added that sovereign wealth funds needed to improve their quality of financial information.

"Let's be brutally frank about this, sovereign wealth funds have been positive and long-term investors," said Mr McCreevy.

"There is no, as far as I am aware, no instance of sovereign wealth funds acting in any manner other than responsibly up until now.

"Some people are afraid of what might happen in the future."

Mr McCreevy added that the EU had no plans to limit investment by such funds, only that all business "should follow some common principles on transparency and governance".

Chinese sovereign wealth fund China Investment Corp recently spent $5bn (£2.5bn) on a 9.9% stake in US banking giant Morgan Stanley.

Fellow US bank Merrill Lynch sold a $4.4bn stake to the investment arm of the Singapore government.