Merkel to campaign for markets tax at G20

20th May 2010, Comments 0 comments

German Chancellor Angela Merkel said Thursday she would lead a campaign for a tax on financial markets at the next summit of the Group of 20 major economies in June and called for international support.

Speaking at a conference on financial regulation here, Merkel said: "We have now stated that we will campaign for a tax on the financial markets and we will campaign for that at our (G20) summit in Canada."

She did not specify whether she was seeking a financial activity tax, which would cover profits and bonuses, or a financial transaction tax, an across-the-board levy on all market dealings.

Hinting at likely difficult negotiations on such a controversial topic, she quipped: "This is something that won't find agreement at our first dinner ... but I do not think it would ruin markets if we had international taxation."

With the focus firmly on the stability of the euro area, Merkel called on the international community to back this idea "even if your countries have not been all that affected" by the recent crisis.

Merkel was speaking at a conference to discuss financial regulation, bringing together ministers and central bank officials from around the world and experts from bodies such as the International Monetary Fund (IMF).

She received emphatic support from a top IMF official for her clarion call for global reform efforts.

"No one knows where the next crisis is coming from, so even countries that were not at the epicentre of this crisis could be at the centre of the next one," said Jose Vinals, director of the IMF's capital markets department.

Looking ahead to the next G20 meeting, Chin Dong-Soo, head of the financial services commission in South Korea, the next nation to hold the G20 presidency, said the current crisis had made the gathering all the more crucial.

"The current fiscal problems in Europe have increased the importance of the G20 as a forum for international economic cooperation," Chin said.

Opening the conference, German Finance Minister Wolfgang Schaeuble said it was not his wish to "stigmatise" speculators but he stressed that "financial markets no longer perform their function of serving the public good.

"Today's market participants do not benefit from calm markets, they benefit when they are as turbulent as possible," he said.

In a wide-ranging speech on financial regulation, Merkel stressed the importance of tightening eurozone fiscal rules which have been widely broken, driving the current crisis over debt and budget deficits.

"If you have a currency like the euro ... then you need stricter rules than other governments that just decide for their own currency," she said.

"We need to tighten up the (EU) Stability and Growth Pact," she insisted, ahead of a meeting of EU finance ministers and the EU president Herman van Rompuy to discuss the pact Friday in Brussels.

She also called for a revamp of the credit ratings agencies which have been accused of exacerbating the crisis by not being tough enough on the countries whose credit they were supposed to examine or by the timing of their reports.

French Economy Minister Christine Lagarde also took up this topic.

"It's critically important that European co-ordination be organised to make sure that ratings agencies actually participate and do not undermine the appropriate organising of markets and valuations," she said.

After earlier rebuffing Merkel's comments Wednesday that the euro was in danger, Lagarde was at pains to stress the good relations between France and Germany, which she said were "on the same page" in terms of regulation policy.

She said she wanted to "celebrate the very strong alliance that, together with Wolfgang Schaeuble, we have forged over time. This has really been the continuation of a relationship that we have built over the years."

© 2010 AFP

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