In a letter to finance ministers from the G20 group of major economies, Darling said that measures to safeguard the financial system against future crises needed to be globally coordinated to avoid creating loopholes or rules that were inconsistent across borders.
The IMF will produce a report at the end of this month on how to make banks pay back some of the cost of recent intervention to stabilize the financial system, and Darling restated his support for a global bank tax or levy. But he rejected the idea that this revenue should be kept out of politicians’ reach to cover the cost of a future crisis. “While internationally coordinated, the proceeds of any levy should be for national governments to use,” Darling said, according to a copy of the letter provided by his office.
“A systemic risk levy should not be seen as an insurance policy to benefit individual institutions, shareholders or creditors. To minimize moral hazard the proceeds of a levy should go into general taxation rather than a stand-alone fund,” he continued.
