December 11, 2009 / 7:44 AM / 10 years ago

EU urges IMF to consider global financial tax-draft

BRUSSELS (Reuters) - European Union leaders urged the International Monetary Fund in a draft statement on Friday to consider imposing a global tax on financial transactions following the economic crisis.

In a statement expected to be approved at an EU summit, they underlined the need for pay and rewards in the financial sector to promote “sound and effective risk management” after Britain and France called for bankers’ bonuses to be taxed heavily.

“The European Council (of EU leaders) emphasizes the importance of renewing the economic and social contract between financial institutions and the society they serve and of ensuring that the public benefits in good times and is protected from risk,” they said in the statement obtained by Reuters.

“The European Council encourages the IMF to consider the full range of options including insurance fees, resolution funds, contingent capital arrangements and a global financial transaction levy in its review,” they said.

They were referring to IMF deliberations on how to limit risk in the financial system following the economic crisis.

British Prime Minister Gordon Brown called for consideration of a so-called Tobin Tax on financial transactions at a summit of the Group of 20 developed and emerging nations but faced opposition from U.S. Treasury Secretary Timothy Geithner.

The draft statement did not refer to calls by Britain and France for greater taxation of banker’s bonuses.

But it said: “Remuneration policies within the financial sector must promote sound and effective risk management and should contribute to preventing future crises in the economy.”

Reporting by David Brunnstrom, writing by Timothy Heritage

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