G7 to tackle future bank failures Jan 25
Britain will host a meeting of finance officials from the Group of Seven nations on January 25 to discuss measures to protect the public from future bank failures, including a proposed global insurance levy, the Treasury said yesterday.
The meeting of senior G7 civil servants, representatives from the International Monetary Fund (IMF) and the Financial Stability Board, will feed into an IMF report due out in April, a Treasury spokesman said on customary condition of anonymity.
The officials will also discuss the use of contingent capital, the holding of debt instruments by banks that could be converted quickly into equity in times of stress.
Need for global debate
Britain's Financial Services Minister Paul Myners, who will host the meeting, said he wanted to promote a global debate about a US-style insurance levy as part of a wider discussion about protecting taxpayers.
"We are looking at a very broad range of principles because these are areas where we have to work as part of an international coordinated response," Myners told BBC radio. "Because we do not want to disadvantage the UK in an industry - banking and financial services - in which we have global leadership."
Global insurance levy
The meeting follows British Prime Minister Gordon Brown's call at November's meeting of finance ministers from the Group of 20 rich and developing countries for consideration of a number of measures to protect taxpayers.
Brown also raised the idea of a tax on financial transactions, but that is not on the table for the London meeting of finance officials.
The push for a global insurance levy has been gathering steam since US President Barack Obama announced plans last week to tax US banks to recoup the public bailout of foundering firms at the height of the financial crisis.
Obama is proposing a tax of 0.15 per cent on the liabilities of large financial institutions. It would apply only to those companies with assets of more than US$50 billion - a group estimated at about 50.
British Treasury chief Alistair Darling, who introduced a one-off tax on bankers' bonuses this year, said over the weekend that Britain is not considering a US-style levy.
But Britain's Conservative Party, which is currently ahead in opinion polls for a general election that must be held by June, has said it would back a global levy if it was agreed by G20 nations.The London meeting of finance officials comes just ahead of a scheduled gathering of G7 finance ministers in Iqaluit, Canada, on February 5 and 6.
Canadian Finance Minister Jim Flaherty has said the Iqaluit meeting will focus on financial industry reforms, strengthening international institutions and promoting a sustainable global recovery.
Canada holds the rotating presidency of the group, rounded out by the United States, France, Germany, Italy and Japan, this year. It has chosen Iqaluit, the provincial capital of the Canadian territory of Nunavut, to showcase the country's Arctic northern region.