Letter to the Editor Financial Times together with Swedish MP Johnny Munkhammar:
”A tax on financial transactions would not solve any of our problems and might become an obstacle to investments and growth. Do we really want to increase transaction costs in the global economy and make economic exchange less beneficial?”
Sir,
As French finance minister Christine Lagarde lays out her government’s agenda for the Group of 20 (“France pushes for balance in G20 trade”, February 14), she emphasises the introduction of a tax on financial transactions.
During the past quarter-century, the world experienced a golden age of prosperity and sharply decreasing poverty, thanks in large part to more open markets. Further openness must be a main objective in order to strengthen the fragile recovery.
What the G20 countries desperately need are policies of balanced budgets and structural reforms for economic growth. This is the way to solve the debt crisis, which currently constitutes the main threat of a new global recession, and to achieve long-term competitiveness.
A tax on financial transactions would not solve any of our problems and might become an obstacle to investments and growth. Do we really want to increase transaction costs in the global economy and make economic exchange less beneficial?
A financial transactions tax might harm emerging markets more, since they normally carry a higher degree of risk. Since social and environmental conditions have improved the greatest in the most open and fast-growing markets, such an effect must be highly undesirable.
What about speculation? Contrary to the hopes of some, many experts warn that such a tax might increase volatility in some financial markets.
Financial markets do need regulation, but they should aim at establishing better supervision and a higher level of confidence and not making transactions more difficult or costly.
Gunnar Hökmark,
Member of the European Parliament (European People’s Party Group)
Johnny Munkhammar,
Member of Parliament, Sweden (Moderate Party)