FTT contravenes G20 agreements, warn global markets bodies
In a bid to see the G20 overrule Brussels, the groups - whose members control trillions of dollars of assets around the world - have asked ministers meeting in Washington to âopposeâ the measure. âNow is not the time to experiment with policies that will fragment markets, increase market volatility, harm savings and impede growth,â the letter warns.
The trade bodies argue that the FTT would have âunprecedented extraterritorial impacts, contrary to G20 principlesâ. It adds that the plans will damage economic growth, increase the cost of financing for companies and governments, and create âharmful spillover effects on the global economyâ.
t is signed by the London-based Global Financial Markets Association as well as the Japan Securities Dealers Association, the Australian Financial Markets Association (AFMA), the Investment Industry Association of Canada and the Korea Financial Investment Association.
The controversial tax, which plans to impose a 0.1pc levy on the value of financial transactions and 0.01pc on derivatives, was first proposed in September 2011. Britain has led the opposition from the start, warning that the tax would be unworkable and harm the City.
But European leaders, with Francois Hollande from France to the fore, have made the FTT a key policy through which to make banks "pay" for the financial crisis and raise revenues too. Eleven EU countries, including Germany and Italy, have signed up to the FTT. EU officials have said they want the tax to apply across the single market.
The letter, dated April 16, argues the âFTT would apply to transactions well beyond the 11 EU member states that have agreed to adopt itâ because it would be imposed to all transactions of a bank headquartered in the markets, regardless of its counterparty.
As it a result it contravenes the Communique made by the G20 just two months ago in which states pledged to âmonitor and minimize the negative spillover on other countries of policies implemented for domestic purposesâ.
The letter warns that the FTT will âcreate a further headwind to global economic recoveryâ because it will âincrease the cost of equity and debt financing for both both governments and corporates [and] the cost of hedging transactions undertaken in the real economy to manage riskâ.
Two weeks ago Icap warned that the FTT would âdamage mainstream economiesâ and that companies would find it more expensive to secure finance.
In a separate report, Barclays said the âpolitically-motivatedâ FTT could cut EU GDP by as much as 0.3pc, at a time when many eurozone countries are in recession. It said criticisms of the tax were ânumerousâ.
http://www.telegraph.co.uk/finance/...20-agreements-warn-global-markets-bodies.html
