Singapore’s sovereign wealth fund GIC Pte. is poised to get a massive influx of new funds to manage after the city-state changed the way the central bank transfers excess foreign currency reserves to the firm.
Parliament on Tuesday passed a bill allowing the Monetary Authority of Singapore to buy a new type of non-marketable security issued by the government, known as Reserves Management Government Securities. The new mechanism will be used to bring down the level of foreign reserves held by the central bank -- currently about $566 billion -- to a rate equal to 65% to 75% of gross domestic product. The rest would be run by GIC.
The result could be a huge injection of funds for GIC, already one of the world’s biggest asset managers. Finance Minister Lawrence Wong said about $185 billion would need to be transferred in phases to reach the optimal reserves amount, without specifying how long that would take. The reserves were equal to about 111% of GDP as of the third quarter, he said.