LONDON/WASHINGTON, Feb 16 (Reuters) – World leaders want banks and financial firms to pay up for government interventions — past and future — to stabilize the international financial system. While details are sketchy, some form of bank balance sheet tax appears to be gaining ground.
Bank tax proposals vary widely, with global coordination seen as crucial, but hard to attain as ever, with all eyes on an upcoming International Monetary Fund report due in April.
Any levy that might result must dovetail with strategies for tackling the “too big to fail” issue, related moral hazards, resurgent banker bonuses and capital standards.
British Prime Minister Gordon Brown said last week he expects the G20 to agree on a bank levy this year. The G7 called for one at its Feb. 5-6 meeting in Canada.
But basic questions remain. Would it be temporary or permanent? Is it chiefly about recouping money spent in the credit crunch? Or is the goal to impose a permanent “insurance” premium to build up funds for future rescues?