UK joins G20 push for world levy on banks

[Nicole is ~READY]

By Sumeet Desai and Huw Jones Sumeet Desai And Huw Jones – 8 mins ago

ST ANDREWS, Scotland (Reuters) – Britain threw its weight on Saturday behind proposals to impose a global levy on banks to fund future bailouts and called on the G20 to work toward a $100 billion deal to meet the cost of climate change.

British Prime Minister Gordon Brown urged finance ministers and central bankers from the group of leading nations to consider the bailout fund urgently, as they met in Scotland to discuss a new framework to rebalance the global economy.

France and Germany have for some time been in favor of looking at a levy but London with its huge financial center has always resisted.

Brown's Labour government, however, is trailing in opinion polls before an election expected in May and footing a multi-billion dollar bill for bailing out the banks at a time of huge public anger against bankers for their role in the crisis.

"We should discuss whether we need a better economic and social contract to reflect the global responsibilities of financial institutions to society," Brown said.

Washington, which has also traditionally been opposed to any global tax, had no immediate comment. The British Bankers' Association said the matter did deserve consideration.

Brown said the International Monetary Fund would review the possibility of a global levy and report back in April next year -- signaling the G20 had agreed as a group to take up the matter more seriously -- and that any measures would have to be globally implemented.

"There have been proposals for an insurance fee to reflect systemic risk or a resolution fund or contingent capital arrangements or a global transaction levy," he said.

"I do not in any way underestimate the enormous and difficult practical and technical issues that will need to be overcome ...But I do not think these issues should prevent us from considering with urgency the legitimate issues."

Last week the French also said they were exploring a tax on financial transactions to help bridge the divide between rich and poor countries on how to finance climate change. The tax could raise 20 billion euros a year which would be used to fund renewable energy projects in the poorest countries.

NO PROGRESS ON CLIMATE CHANGE

Britain is also determined to push forward on a $100 billion target to meet the costs of climate change by 2020 ahead of a major environmental summit in Copenhagen next month as developing nations held firm they did not want to talk about it.

"There will be quarrelling on climate -- we did not manage to agree on anything. But something has to be included in the communique otherwise there will be a scandal. Britain is very keen," a Russian delegate told Reuters.

Finance ministers and central bankers are also expected to maintain their pledge to keep emergency economic support packages in place for now and come up with a new framework to ensure closer policy coordination and rebalance the global economy.

"The agreement you are explicitly discussing today commits G20 countries for the first time to set objectives; to assess how our individual policies for economic development fit together; to evaluate whether these will deliver our objectives; and judge if further action is needed," Brown told the G20 ministers and central bankers.

Currencies are not on the formal agenda of the G20 meeting but tension over the weakness of the dollar and China's managed exchange rate is clearly playing on delegates' minds, with Japan renewing the G7 call for a more flexible Chinese yuan.

(Writing by Sumeet Desai; editing by Patrick Graham)

http://news.yahoo.com/s/nm/20091107/ts_nm/us_g20