A number of proposals have been floated on ways for the financial sector to self-insure against a future crisis. Work is under way at the IMF on global bank taxation. One-off taxes or levies on the financial sector could be used to repay the taxpayer money used in bank bailouts, or to finance a banking sector resolution fund. This second approach, which was proposed by several leading bankers but is not presently being considered in international forums, poses a high risk of moral hazard. The financial industry should therefore be under no illusion that these taxes could substitute for higher capital requirements.
>Hervé Hannoun
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