Implications of a Financial Transaction Tax for the European regulatory reform agenda

Published 27/01/2014

This paper considers the impact on financial stability of the proposed financial transaction tax (FTT).

The objective of this qualitative report is to consider the impact of the FTT on financial stability on both a macro and micro level, in particular the extent to which the FTT is compatible with G20 commitments and European regulatory reforms designed to improve the resilience and stability of the financial sector.

The research has identified that in its current design, the FTT is likely to conflict with rather than complement a number of key regulatory initiatives aimed at increasing financial stability in the financial services sector. The impacts of the conflicts between the FTT and existing regulatory initiatives would be felt on both a micro and macro level and is therefore generally considered an ineffective instrument to enhance financial stability. Its impact on financial stability is likely to be negative or, at best, neutral.

Download the Implications of a Financial Transaction Tax for the European Regulatory Reform Agenda from the City of London website

 

You may also be interested in the following reports on FTT:

A Financial Transaction Tax - review of impact assessments

Financial Transaction Taxes- high level summary of tax options

The effects of a financial transaction tax on European households' savings

The impact of a Financial Transaction Tax on corporate and sovereign debt