European Central Bank chief Jean-Claude Trichet warned Saturday that any new bank levy or tax to pay for future bank collapses had to be carefully designed not to interrupt global financial reform efforts, AP reported. European Union finance ministers are working on ways for the financial sector to cope with banks that run into trouble. One of the options they are looking at is having banks pay a fee toward a «resolution fund» that would help unwind banks as a last resort. Governments are keen to prevent a repeat of the recent financial crisis when rescuing dozens of banks and guaranteeing deposits forced them to pay out billions of euros, adding to their mounting public debt. Trichet warned that the EU should not jump ahead of work done by international banking regulators, the Basel committee, or the Financial Stability Board, a group of global financial experts who make recommendations to the Group of 20 leading economies. «We need the right calibration of any taxes and levies or any sort of concepts that must be applied,» he said. «Sequentially it's very important that we are certain that we are doing what is necessary in terms of the Basel committee and the FSH and the G-20, what's necessary to make sure banking and financial systems are robust and resilient.» EU Financial Services Commissioner Michel Barnier asked EU nations to adopt the «polluter pays» principle, telling them that banks should jointly pay the price of rescuing one of them by contributing to a fund. «It would be a guarantee that enough funds are available in case of difficulties,» he said, promising to put forward a more detailed plan in June that could be turned into draft rules next year. But the speed of some European regulation has already alarmed the United States. Treasury chief Tim Geithner has complained that the EU was moving too fast to regulate hedge funds, warning that extra requirements for foreign-based funds could be a protectionist barrier that went against G-20 commitments for all regions to coordinate reforms. Spanish Elena Salgado, who led the talks because Spain holds the EU's six-month presidency, said the EU's 27 nations didn't have «total consensus» on choosing between a tax on financial transactions or a straight levy on banks. «We have to keep on discussing tools for resolving crises,» she said. «At this stage, no decision has been taken on this score.» Any levy «should be a supplement, certainly not replace» other work to prevent crisis, such as slow EU moves to overhaul financial oversight and regulation, she told reporters at the end of two days of talks. French Finance Minister Christine Lagarde told reporters late Friday that she wanted all major financial groups to pay a fee «on the basis of the riskiest activities that they conduct.» «The riskier the activity, the more tax there would be,» she said. «You could call it a tax on risk.» Any levy on banks to pay into a fund to rescue lenders in future crises would be set up individually by EU nations as there is no widespread support for a bigger European fund. Portugal's central banker Vitor Manuel Ribeiro Constancio _ who will soon take up a post as the European Central Bank's vice-president _ said any levy should be limited to paying for bank collapses and should not be used for other projects. «If governments want to go ahead then this should be linked to deposit guarantee schemes and possibly only used for restructuring and resolution problems of the banking sector itself, not for other purposes,» he told reporters before the Saturday meeting. Poverty campaigners Oxfam and others are calling for a global tax on banks' financial transactions that they say could raise $400 billion a year to channel to poor countries. Finance ministers or their deputies from Belgium, Ireland and Denmark were unable to travel to the two-day talks in Madrid after a volcanic ash cloud grounded most flights in northern Europe. -- SPA
