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Germany approves plan for bank stability fund

2010-04-01 11:33 BJT

The German government has approved a plan to have banks pay into a fund to cover the costs of future financial crises. The proposal has been greeted with interest by France's visiting finance minister.

Under the plan, the financial protection fund will be levied on all banks that operate in Germany. The government expects the so called "stability levy" will raise up to 1.2 billion euros per year.

The German Finance Minister says the government will draw up detailed legislation by this summer. He said Germany would try to produce plans that give sufficient incentives to reduce systemic risks, but will not damage banks' ability to encourage economic recovery.

Wolfgang Schaeuble, German Finance Minister, said, "National measures that are necessary in consideration of the different structures, problems and legal frameworks of each separate country. Plans will simultaneously be developed to be suitable for a European solution and of course also within the G-20 process for international solutions. And that's why I think we did some good work today."

The Cabinet meeting that decided in principle on the bank levy was attended by visiting French Finance Minister - who also is considering what measures to take to help avert future crises.

Christine Lagarde, French Finance Minister, said, "We fundamentally agree on the objectives, which means: the empowerment, the taxation to prevent systemic risks. We also fundamentally agree on the international aspect that this mechanism should represent and on the fact that it must preserve an equal relationship between the banks present on the international markets."

Meanwhile, German opposition contends that the fund will bring in too little money. They've dismissed the plan as a bid to win favor ahead of a regional election in May.

Editor: Du Xiaodan | Source: CCTV.com