BANKS BEWARE

IT is just over a year since the G20 meeting was held in London to agree on the first globally co-ordinated steps towards recovery from the near-collapse of the world's financial system and on measures for the future to prevent another crisis of the same kind. There have been the inevitable criticisms that the G20 was nothing more than a “talking shop” but in fact a lot of progress has been made which will be reported at its next meeting in Toronto, Canada, in June. Yesterday, for instance, the International Monetary Fund published the report commissioned by Gordon Brown and Barack Obama on ways of bringing banks under better control in order to prevent them from leading the way to financial chaos again.

The IMF report proposes two taxes on banks. The first would be a form of insurance provision against future bail-outs that all banks and financial companies would be obliged to take out by paying governments an annual fee.

The second would be a “financial activities tax” based on banks' profits and pay scales. Clearly, such measures would only work if applied universally, at least, in the world's major financial centres. There will be opposition from banks and other financial institutions but if there is enough support from the G20 governments it should be possible to move in the direction of the IMF proposals. The banks simply cannot expect to be allowed to continue in their irresponsible and selfish ways.