Governments use this method to secure the domestic market for liquidation. This implies that these assets are of highly liquidated nature and can be altered easily.
The oil-producing countries have also come within its grip and are losing or rather investing their wealth in such funds. A company adopted a similar approach in the oil commodity. They then invested their wealth in holding bonds, bank deposits in a similar pattern like central banks.
The alarming fact is that no company discloses the application of the funds except for the ones in Norway that provide regular data and statistics. It may be possible that these mysteriously applied investments will be very well lost in the future with no accountability.
It happened in one of a developing country wherein a mushroom growth took place in the early eighties. These investment companies conned the unsuspecting public and lured them by promising huge percentage on their investments. The Government kept silent and this approach encouraged the high profit paying companies to get bolder and bolder till the public was convinced to accept them as legitimate companies. The problem further compounded due to no action by the State Bank. The margin of profits increased as the public committed their funds by selling their immovable assets.
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