Tax on banks would be ‘premature’, Basel chief claims

5 May 2010

Introducing a global levy on banks at this stage in the recovery of the financial markets would be too early, chairman of the Basel II Committee has claimed.

Nout Wellink, who is also head of the Dutch central bank, made the comments as part of an interview with the Financial Times.

He suggested that implementing a tax at this stage could potentially hamper the global economic recovery.

Mr Wellink told the news provider: “I'm not, by definition, against it, but I think it's premature.

“I doubt whether this is a good idea. It's born out of frustration. There are strong political motives behind it."

He added that global leaders should wait until recommendations by the Basel II Committee have been finalised before any further legislation is drawn up.

Proposals from the Basel Committee should go some way to stabilising the banking sector and preventing financial institutions from becoming too big to fail, the chairman explained.

In the interview he concluded that the introduction of a banking levy could reduce global economic growth by as much as one per cent during the next
few years.

Measures the committee has recommended include increasing capital requirements and introducing minimum levels of liquidity.

By Jim Ottewill

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