Myners meets G7 to debate world banking reform

Lord Myners, the City minister, will on Monday meet representatives from the G7, the International Monetary Fund (IMF) and the World Bank in London to discuss reform of the global banking system, including a possible tax on transactions to protect the taxpayer from future bail-out threats

The Treasury is also expected to call on banks to reduce the amount they pay out to staff as a proportion of revenue, so that more of the industry’s profits are used to build up capital.

Lord Myners has suggested that it is not right that banks are currently not required to pay a tax premium for the “implicit state guarantee” they benefit from. There has been widespread public and political opposition to the notion that banks will swiftly return to huge profits and bonuses despite the government support which pulled the system back from the brink of collapse
Commenting on today’s meeting, Brendan Barber, general secretary of the TUC, said: “A financial transactions tax is by far the best way to raise serious money from the finance sector, not just to make good the damage they have already done, but to stop future deep cuts in spending.”

The debate over how to reform the global financial system intensified last week when President Barack Obama proposed sweeping reforms of the sector in the US, which would prevent banks from taking part in certain activities. Lord Myners said the ideas were very specific to the US: “The argument is that hedge funds, private equity and proprietary trading are a source of risk – that is not our general view”.

He added: “The US administration is taking action to address problems in its own system.”

In comments made over the weekend Alistair Darling, the Chancellor, suggested that the US proposals would not have prevented the financial crisis from happening. “You could end up dividing institutions and making them separate legal entities but that isn’t the point. The point is the connectivity between them in relation to their financial transactions,” he said.

The Chancellor also suggested that the US approach could threaten the G20’s progress on reform at an international level: “If everyone does their own thing it will achieve absolutely nothing. The banks are global – they are quite capable of organising themselves in such a way that if the regime is difficult in one country they will go to another one.”

Soutrce:telegraph.co.uk/