(News Focus) (G20 meeting) G20 unlikely to make headway on bank levy: observers

By Koh Byung-joon
BUSAN, June 4 (Yonhap) -- Financial leaders from the Group of 20 countries are
unlikely to make headway on the touchy issue of a bank levy, as they remain split
over the proposal aimed at strengthening the financial system and bracing for any
future global crisis, observers said Friday.
Instead, the officials are expected to shift their focus toward pending global
cooperation on enhancing fiscal soundness in the face of growing anxiety over
Europe's fiscal debt problems, which recently rattled global financial markets,
they added.
"I don't think we're on the verge of a global consensus on bank levies yet," U.S.
Treasury Secretary Timothy Geithner told a recent news conference before leaving
for a two-day meeting of finance ministers and central bank heads of G20
countries that begins Friday in Busan, South Korea.
The Busan meeting comes as each nation is fine-tuning its stance ahead of the G20
summit to be hosted by Canada later this month. This provides a chance to
exchange opinions on diverse pending issues, including global cooperation, to
prevent the repeat of a global crisis and achieve strong and sustainable growth.
A bank levy is among many policy options proposed to make chaos-causing financial
institutions accountable for the damage they do to society by taking excessive
risks. It was first proposed by the United States in order to recoup taxpayers'
money injected to rescue struggling banks.
Currently, G20 counties remain divided over the idea, with the U.S., Britain and
European countries generally in favor. Australia and Canada are, however, among
those who oppose it, claiming that such a tax is not needed as they did not
suffer a financial crisis the same way other countries have been affected since
late 2008.
"Australia is committed to moving the G20 agenda forward on financial regulation.
The G20 has a responsibility to make sure our global banking system can stand on
its own two feet in the years ahead," Australian Treasurer Wayne Swan told Yonhap
in a recent interview.
"But it's also important to remember that the crisis didn't play out the same way
in every country... The Australian financial system did not go through the kinds
of upheaval seen in other advanced economies and is not expected to require the
same kinds of adjustments," he added.
Canada, a chair of the upcoming June summit, also expressed discomfort. Upon his
arrival at an airport here to join the Busan meeting on Friday, Finance Minister
Jim Flaherty told reporters that "there are many countries" that support its
opposition to the idea.
The drive to introduce such a tax also appears to be losing steam as the global
economy is under downturn pressure from anxiety that Europe's debt problems could
derail its fledgling recovery from the downturn. In previous G20 meetings, more
focus was paid to how to coordinate global exit strategies as the economy showed
signs of a fast rebound.
Given their sharp differences, G20 officials are expected to stop short of
reaching agreement on detailed ways to introduce the scheme, instead only
reaffirming their consensus on previously reached principles and leaving the
financial decision to a meeting to be held later this year in Seoul.
"A bank levy remains on top of our agendas," South Korea's Finance Minister Yoon
Jeung-hyun told reporters in a press briefing before leaving for the Busan
meeting.
"Differences among countries still remain, though they have reached a consensus
on a few principles in connection with it. One is to slap a levy on banks or
large-sized financial institutions that cause chaos by taking excessive risks.
The other is to make financial institutions pay the price for their risk-taking,
but not to impose too much a burden on them, which could discourage them from
supporting the real economy, Yoon said.
"I expect that the issue will be dealt with at this meeting, but we should wait
until the Seoul summit in November to see any conclusion."
Reflecting the difficulty in narrowing the divide, the International Monetary
Fund said that it is working hard to reflect different opinions of concerned
parties to provided balanced policy options to G20 countries.
"This is an important issue where many have strong opinions," IMF Managing
Director Dominique Strauss-Kahn told Yonhap. "The G20 has asked the IMF to study
the issue and prepare a report to be discussed by the G20 leaders at their
scheduled meeting in June in Toronto. In preparing this report, we have also
sought to listen to the views of the others."
kokobj@yna.co.kr
(END)

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