Skip to main content

International financial reform/US/France/prudential control authority – Global bank tax

Published on March 17, 2010
Interview given by Christine Lagarde, Minister for the Economy, Industry and Employment, to the “Les Echos” newspaper (excerpts)

Paris, March 17, 2010



Q. – Do you still think international financial reform is possible? We get the impression that the United States and Europe are moving further and further away from it…

THE MINISTER – US Treasury Secretary Tim Geithner has repeated several times that the United States would apply the modified Basel 2 by the end of 2011. But, admittedly, for the moment we see no sign of US banks preparing for this change in standards. I’m going back to the United States at the end of the month and will put the question again very directly to the people I talk to. If it turned out that the Americans are delaying entering this process, France, who will chair the G20 in 2011, will not hesitate to put the issue back on the table. We will be keeping a very close eye on ensuring that the commitments the Americans made at last September’s Pittsburgh G20 are implemented. We can’t see any other scenario for the moment.

Q. – In its proposed financial reform, the United States has tackled the question of the “too big to fail”. Could that be the same in France?

THE MINISTER – The whole objective is to have high-quality regulation – indisputably, in France we have got it and it will emerge strengthened with the establishment of the new prudential control authority which I established on 9 March – and institutions with sufficient high-quality capital. We are on the right track.


Q. – Does a global bank tax seem more pertinent?

THE MINISTER – It’s an interesting concept which can take several forms. The International Monetary Fund (IMF) is working on a draft which should be unveiled at the end of April; British Prime Minister Gordon Brown is also looking into the matter, as is the European Commission. I think that the consensus is going to come down more on the side of the IMF, which is moving either towards the creation of an earmarked fund, a sort of insurance in the event of a new crisis, or a budgetary allocation designed to take account of the systemic risk. Personally, I’m more in favour of the second solution since the first doesn’t seem to me to provide a good bulwark against moral hazard./.

      top of the page