IMF warns it is shortsighted to oppose a global bank levy

City A.M. Reporter
COUNTRIES that weathered the global economic crisis with their financial systems relatively unscathed are being shortsighted by opposing a global bank levy, the IMF’s chief said this weekend.

International Monetary Fund managing director Dominique Strauss-Kahn suggested a bank tax would be helpful in preparing for crises that could strike anywhere and indirectly criticised countries that might think they would never feel the brunt of a downturn.

“The countries... which are likely to implement (a bank tax) are the ones having had problems in the banking sector,” Strauss-Kahn said. “The others say, ‘We didn’t have a problem so we’re immune’.”

“Maybe it’s a bit shortsighted,” he added, without naming any countries. Canada has taken a lead role in rallying opposition to a tax on banks.

The possibility of setting some kind of levy on banks split G20 finance ministers at a meeting on Friday and carried on into the subsequent IMF gathering. The Institute of International Finance, which represents 390 firms worldwide, wrote to G20 finance ministers after the meeting to outline the case against a tax.