WASHINGTON (Reuters) – The IMF sought to maintain unity within the Group of 20 economic powers yesterday, urging countries not to go separate ways in reforming the financial sector, as frictions emerged over a controversial plan to tax banks.
At the start of four days of meetings in Washington, International Monetary Fund chief Dominique Strauss-Kahn said countries need to ensure they are moving in the same direction on regulatory reform if they are to curb the risky practices blamed for the global financial crisis.
“Our main concern is to have everyone working together and to maintain the cooperation momentum,” he said.
Finance ministers and central bankers will assess progress toward repairing recession-torn economies and building a more stable platform for growth, there were signs of divisions, particularly between countries hard hit by the banking troubles and those that largely escaped the pain.
The IMF this week proposed two new taxes on banks to help prevent a repeat of the kind of risk-taking that contributed to the global credit crisis. Britain and other countries welcomed the idea, but Canada is firmly opposed to such a tax.
“We’re a sovereign country,” said Canadian Finance Minister Jim Flaherty.
“We can regulate our banks and our other financial institutions as we see fit. As the finance minister of Canada, I’m not going to impose a tax on our banks that performed well during the financial crisis. It seems to me a very odd thing to do.”
G20 finance ministers are expected to discuss the IMF’s bank tax proposals on Friday, and a final report will be presented at June meetings of G20 heads of state in Toronto.
Strauss-Kahn also urged the G20 to cooperate on measures to rebalance the global economy so that huge surpluses in countries such as China and massive deficits across the rich world don’t trigger another crisis.
The IMF has grown more vocal this week in calling for rich countries to allow their currencies to weaken while China’s yuan strengthens, but the G20 has said little about foreign exchange matters.
The IMF has been careful not to lay all of the blame on China, saying that advanced countries need to let their currencies, the euro and dollar, weaken to promote exports.