The International Monetary Fund is studying proposals like a Tobin tax on financial transactions and "insurance premium" payments by banks for taking on risk, its chief economist said today.
Olivier Blanchard said the fund would present a first report to the G20 group of industrial and developing nations in April, but the multilateral lender was mindful that any levy should not stymie a recovery in lending by financial institutions.
"At this stage we are working on many options and these include a Tobin-like tax on transactions and taxes looking at the past to see if there is any way of getting the (stimulus) money back: taxes on past profits or taxes on assets," he told Reuters.
"Then there is the much more important question of how do we do it in the future? Basically, taxing firms for the risk they impose: some form of 'insurance premia'," he said. "Whether we call these insurance premia or taxes is only a matter of semantics."
Mr Blanchard played down opposition to a Tobin tax from some nations, notably the United States, saying the Fund would study possibilities from a purely technical basis.
"We all understand that a Tobin tax is going to introduce some distortions... will people find a way of avoiding it altogether though?" he said.
"It may make sense to have some kind of tax, but we have to be careful when we do this that we don't squeeze the capitalisation of banks, and so delay lending by another six months," he said. "We can't just take the money and run."
Mr Blanchard said there was no longer a risk of a global economic catastrophe, but world growth remained weak, unemployment was rising and the fiscal situation of some countries remained "extremely tough".
"It doesn't look there are major catastrophes at a world level waiting to happen but unemployment is still increasing, growth is still weak, the recovery is going to be tough, the fiscal situation of some countries remains extremely tough."
"Europe is doing better than was forecast. The other question is how sustainable it is... It looks like the next few quarters will be better than we thought just a few months ago," he said.
Reuters