Germany and France said on Wednesday bank levies should be imposed internationally to ensure a level playing field and called for national bank restructuring rules to be embedded in a European framework. France is the latest country to seek a levy on bank balance sheets to fund bank bailouts, after Germany earlier this month announced plans to introduce such a charge.
"We agree fundamentally on the international nature that this mechanism should have," the French Economy Minister Christine Lagarde told a joint news conference with German Finance Minister Wolfgang Schaeuble in Berlin. The move raises the chances of the G20 group of countries agreeing to a bank levy at their summit in June.
Lagarde added, however, that a bank levy would not necessarily exclude a Tobin-style tax on all financial transactions, which has been rejected by other major economies such as the United States and Canada. Earlier on Wednesday, the German cabinet had agreed new bank restructuring rules, including the introduction of a levy, which aim to reduce "moral hazard", or banks assuming they will be bailed out with taxpayer money in a crisis.
In a joint statement, France and Germany said the new proposals were a "useful contribution to the international debate on how to mitigate systemic risk", and such national rules needed to be integrated into a European framework. "The German proposals take into consideration the particularities of our national structures but should also be embedded in a European structure," Schaeuble said.
The proposals allow the state to intervene swiftly to restructure or liquidate failing banks while transferring the system-relevant parts - divisions whose demise could jeopardise the health of the broader financial sector - to a new body.
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