IMF First Deputy Managing Director interviewed about the future report on financial sector rescues
12 January 2010
Mr Lipsky leads the IMF group preparing a report on analyzing how to fund the direct financial sector support that could be required in a potential financial crisis. The final goal is to reduce systemic risk and improve burden sharing. It will be presented to the G20 next June.
In the interview, Mr Lipsky explains how the IMF will go about its work as it studies various approaches. The final report will be presented to the G20 Leaders next June, with a preliminary version to be discussed at the G20 Finance Ministers’ meeting in April.
When being asked about the taxation of the financial sector, Mr Lipsky said that the IMF is responding to the G20 Leaders’ request for an analysis of the various ways in which the financial sector could help to defray the costs of public sector crisis support. The Report will not just focus on taxation, but also other possible funding sources, including some that resemble user fees.
The IMF is looking at various taxes, the formation of resolution funds and the possibility of capital charges or the creation of contingent capital requirements. The latter term refers to debt finance that converts into equity in pre-specified circumstances related to stress, and that potentially could prevent some bank failures. Of course, even before the IMF looks to use the tax system to fund crisis resolution, there is a need to ask whether current tax rules favour excessive risk-taking and, if so, how such problems could be corrected.
© International Monetary Fund
