U.S. Sovereign Wealth Fund and the Federal Reserve Board: Global Policy Advisors' Forecast

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U.S. Sovereign Wealth Fund and the Federal Reserve Board: Global Policy Advisors' Forecast

​2/16/2025

By Salar Ghahramani

In February 2025, President Donald Trump issued an Executive Order directing the Secretaries of the Treasury and Commerce to produce a plan for a U.S. Sovereign Wealth Fund (SWF) within 90 days. Treasury Secretary Scott Bessent projected that a U.S. SWF could be operational within 12 months. Global Policy Advisors LLC (GPA) forecasts that the proposal may include a defined role for the Federal Reserve, potentially involving its assets (including excess FX reserves) as a funding mechanism. Such a development could carry significant implications for monetary policy, Federal Reserve independence, and congressional authority.

Global Policy Advisors anticipates that the 90-day proposal may explore using Federal Reserve assets, expertise, and infrastructure as an expedient means to seed the SWF, given the immediate liquidity and expertise they could provide. Such a measure would represent a shift from the Federal Reserve’s traditional role of managing monetary policy and economic stability, raising questions about the separation between fiscal and monetary policies.

If the proposal includes a role for the Federal Reserve, it may introduce new concerns regarding the Fed's autonomy. The intersection of Federal Reserve operations with a fiscal initiative like the SWF could blur responsibilities, raising the potential for conflicts between economic stabilization efforts and investment mandates.

The forecast also notes that any proposal involving Federal Reserve assets would likely require congressional approval due to Congress’s constitutional control over federal spending. The inclusion of the Fed in the proposal could spark debate over executive authority, fiscal governance, and legislative oversight.

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