How to reform the world’s biggest piggy-banks

IN MOST countries the priority with the public finances is how to stop debt spiralling. But some places have the opposite difficulty: how to manage piles of savings. China and Saudi Arabia are examples. Globally, governments have over $20trn stashed in state-run investment vehicles. That sum is three times the size of BlackRock, the world’s biggest asset manager. Managing it is fraught and becoming more so owing to protectionism. Governments with spare funds should study Singapore, which, as in many aspects of administration, has its head screwed on.

State investment funds come in several flavours. There are currency reserve funds, which are often managed solely by central banks. Then there is an array of entities that are lumped together under the “sovereign-wealth fund” label, which typically manage pension assets, oil revenues, some currency reserves, or own stakes in companies that governments view as strategic.

Central bank reserve kitties have existed for centuries, and...