Taking note of the faster-than expected recovery process, the finance ministers of the world's 20 leading economies Saturday promised more reforms in the financial sector, but failed to support an IMF proposal to impose a global tax on banks.
The International Monetary Fund's (IMF) proposal to establish a global tax on banks came following the still lingering global financial turmoil which was primarily caused by the Wall Street banks and comes on heels of US president
Barack Obama's resolve to discipline the Wall Street titans to help reduce the likelihood of future financial crises.
"There was not an agreement on a global bank tax," Canadian finance minister Jim Flaherty told reporters after the meetings here today. "Some countries are in favour of that. Some countries quite clearly are not. It depends whether a country has had to use taxpayers money to bail out banks, for the most part," Flaherty said.
Earlier the ministers called for continuing the policy support till the recovery, which they noted has been faster than expected, is firmly driven by private sector as it is uneven and is still led by government support in most parts.
"The global recovery has progressed better than anticipated, largely due to the G-20's unprecedented and concerted policy efforts. It is, however, proceeding at different speeds within and across regions, and unemployment
is still high in many economies," a communique issued at the last day of the meeting said.
"The world economy is coming back stronger, more quickly than many people expected. And we heard today, and you heard last night, from countries around the world, encouraging signs
of building momentum of broader recovery. And I think that's very encouraging,"US treasury secretary Timothy Geithner said.
In its proposal, the IMF had argued that its proposal to impose broad taxes on the financial industry would reduce the likelihood of a future crisis. "Our belief is that the tax
system can help to reduce the likelihood of future crises along with regulation, of course. Taxation will not do everything by itself, regulation has its role to play," IMF MD Dominique Strauss-Kahn had said on Thursday.
After meeting, which was attended by finance secretary Ashok Chawla, Geithner acknowledged that despite best of efforts, it could not push for the tax, though there was
significant support for it.
"We are trying to establish the basic principle that, where governments are exposed to risk and putting out financial fires like this, taxpayers don't bear the burden of paying for the costs of those actions," Geithner said.
The Obama administration has proposed in the US a fee on risk, that would be paid by the largest banks over time, to cover the costs of emergency financial rescue.