Tuesday

19th Mar 2024

EU supports bank levy plans in G20 letter

  • The draft letter is a further sign of EU support for bank levies (Photo: Wim Mulder)

The European Union has indicated it is ready to work with the Group of 20 leading economies in constructing a global framework for taxing banks.

"We are ready to co-operate with G20 members on globally co-ordinated principles for a stability levy on the financial sector," EU officials wrote in a draft letter earlier this month, seen by Reuters.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The fresh sign of support comes ahead of an informal meeting of EU finance ministers in Madrid later this week (16-18 April), where the finance chiefs will attempt to hammer out a more unified EU position on the subject.

With the recent financial crisis forcing governments to bail out struggling European banks, policy makers have come forward with an array of suggestions on how to force the industry to pay for some of the costs.

So far, there been little coalescence around one idea however, with pressure building ahead of a G20 finance ministers meeting in Washington next week.

French Finance Minister Christine Lagarde repeated her support for a bank levy on Tuesday (13 April). "We need to put in place barriers, deterrents, obstacles, disincentives so that banks do not follow the same road that leads to systemic risk," she said.

A European Commission study published earlier this month suggested a new tax on banks could generate as much as €50 billion a year for EU governments, currently struggling under record-high budget deficits.

The reports authors said the money could be used to fund future bank bail-outs, climate change and development goals.

IMF assessment

For its part, the International Monetary Fund has taken a tough line on banks deemed "too big to fail".

In a 27-page assessment published on Tuesday, the Washington-based organisation analyses the idea of bigger banks holding greater amounts of capital than smaller firms, and also indicates support for the idea of bank levies.

It is necessary to consider "instituting systemic-risk based capital surcharges, applying levies that are related to an institution's contribution to systemic risk or, perhaps, even limiting the size of certain business activities," says the document.

The suggestions are likely to prove controversial in financial centres such as Wall Street and the City of London where bankers have repeatedly stated their opposition to tougher regulatory obligations for larger firms.

EU suggests €50 billion bank tax idea

The European Commission has published a study which suggests a new tax on banks could generate as much as €50 billion a year for EU governments, whose public finances have been left in tatters following the recent financial crisis.

EU supply chain law fails, with 14 states failing to back it

Member states failed on Wednesday to agree to the EU's long-awaited Corporate Sustainable Due Diligence Directive, after 13 EU ambassadors declared abstention and one, Sweden, expressed opposition (there was no formal vote), EUobserver has learned.

Latest News

  1. Borrell: 'Israel provoking famine', urges more aid access
  2. Europol: Israel-Gaza galvanising Jihadist recruitment in Europe
  3. EU to agree Israeli-settler blacklist, Borrell says
  4. EU ministers keen to use Russian profits for Ukraine ammo
  5. Call to change EIB defence spending rules hits scepticism
  6. Potential legal avenues to prosecute Navalny's killers
  7. EU summit, Gaza, Ukraine, reforms in focus this WEEK
  8. The present and future dystopia of political micro-targeting ads

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Join EUobserver

EU news that matters

Join us