No Sign of Financial Regulation
Friday, July 23, 2010
This was confirmed just ahead of the meeting of the Group of Twenty (G-20) in Toronto last month, a summit of the world's largest economies, including several developing countries, like India, Brazil and Indonesia, and the European Union (EU). Even though the EU agreed to propose at the summit the introduction of a tax on international financial transactions, also called Tobin tax, this scheme was not approved at the meeting. Canadian minister of finance Jim Flaherty told the press ahead of the meeting: 'I can assure you that the majority of the G- 20 is opposed to this tax.'
The German finance minister, Wolfgang Schaeuble, also excluded the possibility of Germany alone raising the tax. At a press conference in Berlin late last month, he contended that the EU collectively must raise the tax.
The German government is the main supporter of the Tobin tax in Europe. Most European countries except Britain support a tax on financial transactions. Britain opposes it vehemently, arguing that the tax would raise costs of financial operations, compelling operators to operators to move their base of operation elsewhere.
The tax, as originally suggested by Nobel laureate economist James Tobin in 1972, was intended to put a penalty on short-term financial round-trip speculative transactions in foreign currencies. In its most modern version, a very small levy on all international financial transactions is supposed to persuade investment and hedge funds to reduce their speculative operations, which are blamed for the global financial crisis.
The lack of unity among the industrialised countries on the Tobin tax is exemplary for all other areas of international financial transactions. Stern regulations, experts say, are necessary to introduce transparency in the operations of investment banks and funds. But despite this, no regulations have been put into practice.
A service of YellowBrix, Inc.
Labels: EU Countries, G20
posted @ 2:47 PM,
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