Singapore - Representatives of sovereign wealth funds (SWFs) met in Singapore on Wednesday in a bid to make further progress on voluntary guidelines that would allay European and US fears of political interference.

A set of generally accepted principles and practices are under deliberation with the aim of promoting "a clearer understanding of the institutional framework, governance, and investment operations of SWFs that would support the maintenance of an open and stable investment climate," a statement by the SWF's International Working Group
(IWG) said.

The second working session of the 23-member IWG, which was formed in May, is seeking to formulate a code of ethics that could be formalized by October.

Estimates of the assets controlled by SWFs amount to 3 trillion US dollars. China and Russia have set up funds in recent years. Iran set one up in 1999.

Soaring oil prices have swelled the coffers of the wealth funds in Russia and the Gulf.

The International Monetary Fund expects sovereign funds to manage some 10 trillion US dollars by 2012.

SWFs have stirred political fears after coming to the rescue of a number of large banks hit by huge losses from the US mortgage crisis.

Although SWFs have existed for the past quarter of a century, their "recent rise to prominence following investments in troubled US financial groups has prompted much debate about their role in the broader global economy," said a PricewaterhouseCoopers analyst.

Singapore, Abu Dhabi and the United States signed in March a voluntary set of principles, including to base SWF investment decisions on commercial grounds rather than geopolitical strategies of a controlling government and more openness about SWF finances and investment aims.

The Group of Eight nations said government-controlled SWFs play an important role in the world economy.

"We welcome recent commitments by some SWFs to greater transparency," the G8 leaders said in a joint statement issued on Tuesday.

IWG member countries include Australia, Azerbaijan, Bahrain, Botswana, Canada, Chile, China, Equatorial Guinea, Iran, Ireland, South Korea, Kuwait, Libya, Mexico, New Zealand, Norway, Qatar, Russia, Timor-Leste, Trinidad and Tobago, the United Arab Emirates, the United States and Singapore.

Saudi Arabia, Vietnam, the Organization for Economic Cooperation and Development, and the World Bank participate as permanent observers.

The Government of Singapore Investment Corp is the longest-established SWF in the Asia-Pacific region. It publicly discloses assets under management of at least 100 billion US dollars. (dpa)