Global Biz

G20 communique rules out global bank tax

(Agencies)
Updated: 2010-06-05 14:04

US Treasury Secretary Timothy Geithner, Spain's Finance Minister Elena Salgado, Bank of Korea Governor Kim Choong-soo, South Korean Finance Minister Yoon Jeung-hyun and France's Economy Minister Christine Lagarde (front row, L-R) smile during a group photograph at the G20 Finance Ministers and Central Bank Governors meeting in Busan June 4, 2010. [Agencies]

BUSAN, South Korea - The G20 will put to rest proposals for a global bank tax, introducing new language in their communique that recognises some countries did not have bank bailouts and therefore may seek alternative policies, a senior G20 official said on Saturday.

Finance ministers and central bank governors from the group leading emerging and developed nations will issue a communique later on Saturday that agrees to the principle that banks should bear the costs of government bailouts, but only where they actually occurred.

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Their final statement will recognise "a range of policy approaches" for ensuring taxpayers are not on the hook for bank failures in the future, the official said, speaking on condition of anonymity.

The meeting in the South Korean port city of Busan is preparing the groundwork for a leaders' summit in June later this month in Toronto.

The official said the text is different from previous communiques in that it broadens the focus from simply fixing problems in banks when they occur by setting the stage for policies that would fund bank resolutions as well.

The G20 will repeat its pledge to agree to new bank capital rules by a November summit in Seoul but will make no nod to talk of delaying implementation of those rules beyond 2012.

The statement will also refer to the European debt crisis as a reminder of the challenges still facing the global recovery and will call for greater transparency by banks, but without mentioning the euro zone specifically.

It will say there is a need for countries to tackle fiscal deficits, tailoring their plans to individual needs.

The G20 officials discussed in detail policies they should adopt across the globe to prevent a return to the global current account balances that many believe contributed to the financial crisis.

They will agree this weekend on which policies are needed, including on issues like China's foreign exchange policy, to ensure sustained global recovery. The communique will not explicitly mention these policies, leaving that to the leaders in Toronto.

But there is not yet agreement on whether individual countries will commit to specific policies and submit their plans to review by their G20 peers, the official said, although that is the hope of some.