Abstract
The IMF has proposed two new global levies on banks to be considered. The first, the ‘financial stability contribution,’ is a flat levy to be paid by all banks to generate a self-insurance fund equivalent to 4–5 percent of each country’s GDP, totaling about $1–2 trillion. The second levy, called the ‘financial activities tax,’ or FAT, is on the profits and remuneration of banks, and this money can be paid into general revenue, meaning that it is not geared for insurance but to deter risk-taking behavior. The IMF also recommends that resolution regimes, or ‘living wills,’ be mandated alongside this scheme to try to address some of this moral hazard so that taxpayers will not be forced to bail out banks if they can fail without causing systemic collapse (www.imf.org/external/pubs/ft/gfsr/2014/01/pdf/c3.pdf).
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© 2015 Dipak Basu and Victoria Miroshnik
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Basu, D., Miroshnik, V. (2015). Financial Stability and the International Monetary Fund. In: International Business and Political Economy. Palgrave Macmillan, London. https://doi.org/10.1057/9781137474865_9
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DOI: https://doi.org/10.1057/9781137474865_9
Publisher Name: Palgrave Macmillan, London
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