PARIS (MNI) – A global bank tax being proposed to boost both crisis
prevention and crisis management may not be necessary, and in the worst
case it could create undesirable moral hazard, European Central Bank
Governing Council member Christian Noyer said Monday.
“In principle, this idea seems quite appealing. However, the
diversity of objectives that may be given to such a tax shows that the
policy debate must be clarified,” Noyer said in the text of speech
delivered in New York and provided by the Bank of France, which he
heads.
The bank tax idea, a version of which has been proposed in Germany
and endorsed by France’s Finance Minister Christine Lagarde, is aimed at
boosting prevention by altering the incentives of financial institutions
and putting on their shoulders the systemic risk that their activities
generate. Moreover, the tax would provide a pot of money enabling
government to recover the costs of bailing out banks once a crisis hits.
But Noyer said “it remains to be demonstrated” whether such a tax
would really contribute anything extra, especially in countries like
France, which he said already has “an effective regulatory and
supervisory framework and in which public interventions in the financial
sector have entailed no net costs to the government.”
Moreover, Noyer warned, “we absolutely have to avoid situations in
which the payment of taxes or levies is understood as a de facto bailout
policy insurance. In this respect, the allocation of the tax to a
resolution fund or to the general budget does not enable public
authorities to totally remove such a risk.”
Noyer added that an “adequate, median” solution would be to expand
the responsibilities of national deposit guarantee schemes to include
both early intervention and resolution.
–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com
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