April 19, 2010
Jim Flaherty, the Minister of Finance, suggested yesterday he “couldn’t rule out” the possibility that the Group of 20 countries will fail to find a consensus on financial reform, just as U.S. legislators crank up efforts to overhaul their system on news of fraud charges against GoldmanSachsGroupInc.
Mr. Flaherty, speaking to reporters in Toronto, said the push for a global bank tax could result in certain G20 countries implementing their own set of rules. Hours after Mr. Flaherty’s comments, a similar message emerged from the chief executive at Bank of Nova Scotia, Rick Waugh, who hinted Canada could opt out of a global bank tax should that become part of G20 policy.
The stalemate is likely to come to a head next weekend when finance and central bank officials meet in Washington in ongoing efforts to come to an agreement on new global financial regulatory standards by the end of 2010.
Officials from the host country will likely want to push for consensus and progress to build on some of the momentum generated from the Securities and Exchange Commission filing fraud charges against Goldman Sachs over the investment bank’s alleged handling of over-the-counter derivatives.
“We can’t allow history to repeat itself,” Barack Obama, the U.S. President, said yesterday at the start of a meeting at the White House with his panel of external economic advisors.
Prior to news of the Goldman charges, Mr. Flaherty said Canada would not retreat from its bank-tax opposition, and suggested that it could have implications for efforts to reform global financial rules.
“We’re not going to do in Canada steps like a tax on our banks or a tax on financial transactions,” he said. Asked if this could result in G20 countries taking different approaches to financial reform, Mr. Flaherty said he “couldn’t rule out that possibility.”
One leading G20 expert said Mr. Flaherty is putting the small number of countries that back a bank tax on notice.
“This is the tactical manoeuvre of the day regarding the bank levy,” said John Kirton, foreign policy specialist at the University of Toronto.
Continue reading this article in the National Post.