Cash reserves that have funded SWFs have accrued from several sources such as foreign currency deposits, gold holdings, Special Drawing Rights, petroleum, and state pensionsSWFs are essentially a byproduct of globalization.

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If they take client deposits, they must set up a special reserve account at a commercial bank.

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The thinking is that the bits of the banks that lend to and take deposits from British households and small businesses need special protection, by being financially and legally separate from the rest of the firm.

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According to Bismarck Rewane, an analyst at Lagos-based Financial Derivatives, many of the banks have managed to meet the capitalisation benchmark by raising capital through share offerings and entering into special treaties which sometimes involve the exchange of loans for deposits.

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