All World

Lagarde returns to Berlin at the cost of a tax on banks

In Berlin

That's all smiles as Wolfgang Sch?uble, German Minister of Finance and his counterpart, Christine Lagarde, have been presented to the press after the German Council of Ministers which, for the first time a foreign minister was able to attend. After quarrels on the question of rescue of Greece and the tensions in the German economic model, the French Minister has stressed "the very friendly and warm hospitality" of his German colleagues. Asked about his remarks about the controversial German exports, Christine Lagarde has countered that she had wanted to "congratulate" the German competitiveness. "I am very careful not to criticize, because we must first put its own house," she smiled.

The Franco-German reconciliation was played around a tax on banks that Berlin wants to impose on the European and international level, with the support of Paris.The compulsory levy, calculated in terms of systemic risk – that is to say the risk of contagion that would expose their failure to the rest of the economy – should contribute to a fund to help financial institutions.

More than one billion euros

In Germany, such a tax would yield 1 to 1.2 billion euros per year. "A bill must be presented before the summer holidays, and may be adopted in the second half of the year," said Wolfgang Sch?uble No faxing pay day loans. For the Minister of Finance taxation of banks should remain "moderate" to avoid compromising their role in providing credit to the economy that is recovering from recession.

To avoid distortion of competition, Paris and Berlin argue like the International Monetary Fund (IMF) for a tax credit internationally.Christine Lagarde believes it is important to act "on a double angle: Prevention and Accountability" of financial institutions. But the tax credit mechanism must also "maintain a set level playing field between banks involved in international markets.

One issue still under discussion between the two countries: the destination of the tax. While Paris wants to assign to the state budget, the Germans are considering creating a special fund.The national rules will be required, although the mechanism is doomed to fall within a framework of European regulations or international.

"The Franco-German cooperation is narrow, it becomes more and more, and is based on trust," said the German finance minister, who will attend an upcoming French Cabinet, a priori, April 7.

ALSO READ:

"Paris and Berlin ready to tax the banks

"Lagarde at the German Council of Ministers