By Yali N’Diaye
WASHINGTON (MNI) – France favors a taxation system that targets
not just banks but all financial institutions that could pose a
systemic risk to the economy, Finance Minister Christine Lagarde said
Friday.
“I am convinced we need such a mechanism,” she said in a press
conference at the conclusion of the meeting of Group of 20 finance
ministers and central bankers.
“It is indeed important that all financial players be affected,”
she said, citing banks but also insurance companies, hedge funds or
pension funds.
“A tax would allow to do that,” she said, whereas capital
requirements or additional taxes on bank capital would not.
“We had a long debate on the topic,” she said, adding no agreement
has been reached, which was never the intention.
Based on Friday’s discussions, the International Monetary Fund will
continue its work and propose a new version at the next G20 meeting of
heads of states and governments in June.
The debate itself was a progress, Lagarde said.
She said France, the U.S., UK and Germany all agreed on a tax
mechanism on banks, unlike Canada and Australia — and a number of
emerging countries — who questioned the relevance of such a tax on
financial institutions.
Canada’s argument, for instance, is that its financial system has
been able to withstand the crisis.
Lagarde, however, argued that while it is true this time, it does
not guarantee that the Canadian banking system will always be insulated
and it could one day benefit from a tax mechanism.
** Market News International Washington Bureau: 202-371-2121 **
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