1 Feb 2010

Bank insurance levy backed at forum

7:05 am on 1 February 2010

An insurance levy on financial institutions to help bail out banks in any future financial crisis has been backed at the World Economic Forum in Switzerland.

Politicians and bankers expressed support for the idea, while the International Monetary Fund has described it as practical.

The levy would go into a fund which could be used to bail out the banks instead of taxpayer money.

Governments across the world have spent billions of dollars saving banks.

The BBC reports an insurance levy is seen by many as a more realistic option than a tax on financial transactions, often referred to as a "Tobin tax", which has been discussed but has proved unpopular in some quarters.

The tax has been proposed by Britain and France, but has garnered less support in the United States.

An insurance levy is seen as a more workable solution, not least because it has been backed by some leading bankers.

Deutsche Bank chief executive Josef Ackermann has advocated what he called a European rescue and resolution fund, while Barclays head Bob Diamond supports the idea of a global levy.

Such a levy is one of a number of options being outlined by the IMF that will be presented to G20 ministers in April.