Sovereign Wealth Fund for Mongolia

Written by Gangerel Lkhagvajav, Bank Executive, Mongolia

My Friend Gangerel LKHAGVAJAV, is a brilliant banker in Mongolia

He has 10 years working experience in the banking sector, strong problem solving ability, quantitative and analytical skills. Gangerel has a good background in mathematics and statistics and solid knowledge in Corporate Finance and Financial Accounting. He has worked with the Central Bank of Monogolia and now with another leading bank there.

Gangerel Lkhagvajav is one of the smartest bankers in Mongolia. His background in mathematics, stastistics, corporate finance, and accounting is of such excellence that he could compete in any bank in the world. He has a concept that could help Mongolia develop, and we think it has merit.

This coupled with our concept that Mongolia should allow "numbered accounts" and attract deposits from throughout the world. Mongolia would be as wealthy as Switzerland, with outside capital investment and deposits. But read his ideas.

His initiative to start a Sovereign Wealth Fund in Mongolia is brilliant. I think you will be impressed. Ben B. Boothe Sr.

Executive Summary:

Sovereign Wealth Fund (hereafter SWF) is a state-owned investment fund composed offinancial assets such as stocks, bonds, property or other financial instruments. 

For many recent years, SWFs have come into limelight with their rapidly growing asset size which has already exceeded that of hedge fund industry, and gained world-wide exposure by investing in several Wall Street financial firms including Citigroup, Morgan Stanley, and Merrill Lynch who are incurring huge losses resulting from sub-prime mortgage lending. 

Today, the SWF industry consists of more than 40 institutions; following the suit of countries, many countries are intending to set up SWFs, namely Japan, Canada and Bolivia. 

By virtue of its current dangerous economic and political situation, Mongolia urgently needs to establish SWF industry. It is considered that Mongolian national security situation has been deteriorating from year to year as is leading it to the brink of survival in terms of its independence. 

Depending on its organic economic and capital market development, there should be three stages for creating SWF industry though some of them have already established but have not been operating at the benchmark level like foreign such funds. 

Phase I: Set up Stabilization Fund and Development Fund separately

Phase II: Set up Savings Fund

Phase III: Set up Reserve Investment Corporation 

By creating SWF industry in Mongolia and running it at the worldwide benchmark level, it will be able to provide funding sources to its strategic, export oriented sectors and create huge foreign reserves. In return, Mongolia and the USA will have closer ties and relationships, offering more opportunity for commerce for each.