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ECB official says proposed transaction tax may not be worth it


Christian Noyer

Christian Noyer

Christian Noyer

The European Union's proposed financial-transaction tax may not generate any revenue because of the market damage it would cause, European Central Bank governing council member Christian Noyer said.

"The analyses we've done show that the project, as it has been prepared by the commission, will first of all raise nothing at all, there'll be no revenue," Mr Noyer told reporters in Paris, stepping up central bank criticism of the levy.

"The immediate effect will be either to destroy financial sectors" such as the repurchase agreement market, or to create conditions in which "the cost of borrowing in the real economy will increase for everyone", Mr Noyer said.

He also flagged concerns that the plan would hurt the ECB's monetary transmission channels, a concern raised by others on the central bank's governing panel. Britain and Ireland are among the countries which have refused to sign up to the tax.


The EU has proposed a broad-based tax on stocks, bonds, derivatives and other trades that could be collected worldwide by France, Germany and nine other EU nations, including Belgium, that have so far signed up.

The European Commission has resisted calls to exclude government bonds from the proposed levy.

Mr Noyer, who leads the Bank of France, said taxing secondary-market bond trades would encourage investors to trade outside the EU or make it "very significantly" more expensive for governments and companies to finance themselves.

"This is another example of early research showing the potential sclerotic effect of the FTT," said Richard Croker, head of tax at law firm CMS Cameron McKenna. "Either markets migrate outside the EU or the costs of borrowing will increase." (Reuters)

Irish Independent