James Tobin In 2001, in another context, just after "the nineties' crises in Mexico, Southeast Asia and Russia,"which included the 1994 economic crisis in Mexico, the 1997 Asian Financial Crisis, and the 1998 Russian financial crisis, Tobin summarized his idea:
The tax on foreign exchange transactions was devised to cushion exchange rate fluctuations. The idea is very simple: at each exchange of a currency into another a small tax would be levied - let's say, 0.5% of the volume of the transaction. This dissuades speculators as many investors invest their money in foreign exchange on a very short-term basis. If this money is suddenly withdrawn, countries have to drastically increase interest rates for their currency to still be attractive. But high interest is often disastrous for a national economy, as the nineties' crises in Mexico, Southeast Asia and Russia have proven. My tax would return some margin of manoeuvre to issuing banks in small countries and would be a measure of opposition to the dictate of the financial markets.
Posted by on 12/03/12
Over 70 organisations (click here) have urged the Danish EU Presidency to speed up negotiations on a financial transaction tax (FTT) in a letter sent ahead of tomorrow’s EU Finance Ministers meeting, where an EU FTT will be up for discussion.
Signatories want to see EU finance ministers take concrete steps
towards a decision on the FTT – otherwise know as the Robin Hood Tax –
and stress that the opinions of opposing governments should not stop
this from happening before the end of the Danish EU Presidency at the
end of July.Clearly, warm words on the FTT are no longer enough. It is time that European leaders stand up and be counted. They have a real opportunity to raise billions to help poor people here and overseas hit by the economic crisis, and to tackle climate change....
