PARIS (MNI) – Taxes on banks to help cover the risks created by
their activities will work if they are coordinated at an international
level, European Central Bank Executive Board member Gertrude
Tumpel-Gugerell said in the text of a speech for delivery Monday at a
conference in Brussels.

“As regards these initiatives, I would like to underline that the
ECB has always been supportive of exploring the feasibility of such
measures,” Tumpel-Gugerell said. “However, for such measures to have the
desired effect, it is important that an internationally coordinated
solution is ensured. I am also of the view that any contribution by
financial institutions to compensate for failures should be
complementary and coherent with regulatory, supervisory and regulatory
regimes.”

Germany, France and the U.K. issued a joint statement last week
signalling their support for such levies on banks and indicating that
they would each implement one, though the details and amounts expected
to be raised are different.

The G20 leaders, who met in Toronto over the weekend, put off any
agreement on a global bank tax.

Tumpel-Gugerell also urged stronger regulation of derivatives,
saying that they should be traded with the use of central counterparties
(CCPs) and the trades should be more transparent by enforcing reporting
requirements through centralised trade registries.

“In my view, if CCPs and trade repositories for credit default
swaps had been available before the Lehman default, Lehman’s CDS
exposures could have been managed in a much more transparent and
resilient way and could have mitigated the negative chain reaction on
CDS markets that followed the demise of Lehman,” she argued.

“It is therefore important to adopt and implement the regulatory
requirements for the mandatory central clearing of all eligible products
and the reporting of trades to trade repositories in a timely manner.”

Tumpel-Gugerell also echoed comments by some of her ECB colleagues
that tigher capital rules for banks should be phased in over a longer
period rather than weakened to mitigate their shorter-term impact.

–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com

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