March 14, 2012
The introduction of an EU-wide financial transactions tax (FTT) has been delayed again in Brussels, as it has met with strong opposition from a group of countries led by Britain. Undaunted, the French and German finance ministers, seconded by the Italian premier, are pushing the Danish presidency to speed up talks on the issue.
First proposed some forty years ago by Nobel prize winner James Tobin, the financial transactions tax is supposed to avoid the destabilising effects caused by an influx of ‘hot money’ speculating a country’s currency, or to prevent the type of speculation in derivatives and other exotic financial products that led to the global crisis of 2007-2008.
As I argued in my e-Book «The Asian Crisis», the need for the introduction of some form of FTT has become abundantly clear as early as 1997-1998. Considered a bad idea by Nicolas Sarkozy at the time, it is now peddled in Brussels by the current French leadership largely for electoral reasons. With 80 percent of all financial transactions within the EU taking place in London, however, Britain’s refusal to endorse such a reform is seen as crucial to its potential implementation. Sweden, the Czech Republic, Malta and Luxembourg also seem to oppose it, whilst a group of nine EU members led by Germany and France want to use the provisions of the Lisbon Treaty and introduce it initially in a limited number of countries. As matters now stand, the likelihood of introducing the FTT over the next year or two seems rather remote. (sources: Der Spiegel, Viet Nam News, Daily Telegraph, Bloomberg)Florian Pantazi