some countries, which traditionally have been invested mainly in liquid and safe instruments, are increasingly being switched into riskier assets. also, in some countries, state - owned banks and companies invest in foreign assets where some of the policy issues are the same as for sovereign wealth funds. modern sovereign wealth funds are not new, in fact the first – the kuwait investment office – was set up here in london in february 1953 – just as edmund hillary and tenzing norgay were setting out to climb everest. 2 and the number of funds has been increasing since then like the traffic on the slopes of everest. the next wave were set up by other oil producers after the price increases in the 70s and 80s for persuasive reasons ( chart 2 ). first oil is a non - renewable resource so it can make sense for governments to spread the benefits of this endowment across generations by investing part of today ’ s income in assets that will provide an income tomorrow. that would be so even if the path of oil prices was predictable but in fact it is not. that uncertainty about future income provides a second case for saving today. in the late 1970s, some oil exporters increased spending to match higher incomes and faced a painful adjustment when prices fell back again. third, even if the rise in income was permanent there would be a case for phasing the growth of domestic spending and investment to prevent supply bottlenecks leading to inflation. recent growth of swfs since the millennium at least 10 new swfs have been set up and there are reports of plans for more for example in brazil, japan and india. this reflects the remarkable shift of emerging - market economies from debtors to creditors. ten years ago – at the time of the asian crisis – emerging markets as a whole were running a current account deficit. since then they have been running progressively bigger current account surpluses reaching an estimated $ 685 billion last year ( 1. 3 % of world gdp ). 3 the counterpart to this is that developed countries as a group have been running progressively bigger current account deficits not just in the united states but also in a number of other developed countries including the uk. 4 of course there are some notable exceptions in each group : canada, japan and germany for example are still creditors while many countries in central and eastern europe and africa are running large deficits. but maps 1 and 2 show how much the pattern has changed in the last 10 years. most of south america and south east asia have swung from deficit

2010. see “ securities lending and repo : market overview and financial stability issues ”, and interim report of an fsb group chaired by my colleague david rule. bis central bankers ’ speeches everything down. as i said at the outset, non - bank finance is not intrinsically a bad thing. we will need effective surveillance of what is going on and what concentrations of risk are emerging – through outfits like the fsb ’ s committee on vulnerabilities and, in the eu, through the european systemic risk board. and we will have to make discerning policy judgments that are explained and consulted upon. that is exactly what the eu, alongside the fsb, is now embarked on. bis central bankers ’ speeches