Germany highlights bank tax, debt ahead of G20 meeting

25th June 2010, Comments 0 comments

German Finance Minister Wolfgang Schaeuble pushed on Friday for a banking tax in cooperation with the United States, but also warned that Washington must curb forces that could lead to another crisis.

"There is a fairly large consensus in Europe and in the United States on the will to introduce a bank tax and restructure the banking sector," Schaeuble told RBB radio.

"That will not be the case all over the world. But if we do that together in parallel with the United States it will be an important step," he added.

Britain, France and Germany have said they are prepared to introduce some kind of tax on the banking sector, which was bailed out of a financial crisis with billions of pounds and euros in state funds.

Schaeuble acknowledged it would be hard to reach agreement on a global financial transactions tax at a meeting of the G20 group of developed and developing economies in Toronto.

"But if, after Toronto, we realise it cannot be done on a global scale, then we will do it for ourselves in Europe," he added.

In a separate interview with the financial daily Boersen Zeitung, Schaeuble pressed the United States for more budget discipline, a subject that has stirred debate on both sides of the Atlantic.

"Despite ever increasing stimulus and a budget deficit that sometimes takes your breath away, no result has been seen on the labour market" in the United States, said the German finance minister.

US officials were "trying everything they can. Without doubt, the forces that led to the crisis will be unleashed again," he warned.

Low interest rates and huge amounts of cheap credit are believed to have set the stage for a financial crisis sparked in mid 2007 when US homeowners began to default en masse on risky mortgages.

"I am careful not to give the US advice on economic growth, Germany believes it is clear that an excessive public deficit is an obstacle to global growth," Schaeuble said.

Washington has repeatedly told Germany it should re-orient Europe's biggest economy from an export-driven model by spurring domestic demand, and Berlin has responded with a media blitz to defend its position ahead of the G20 meeting.

© 2010 AFP

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