IMF exploring insurance levy on banks

By Brian Love

PARIS (Reuters) - The International Monetary Fund is exploring the idea of making banks pay insurance fees to fund any future rescues in the sector, IMF managing director Dominique Strauss-Kahn said on Sunday.

He said such a tax would be in line with a proposal at the weekend by Prime Minister Gordon Brown, who urged world governments to consider imposing a levy on banks.

Strauss-Kahn, speaking by telephone to Reuters, said his organisation was not pursuing a global tax on financial transactions -- a so-called "Tobin tax" -- which was one of several options floated by Brown.

But media reports suggesting there is a split between the IMF and Britain on the fundamental idea of imposing a levy are wrong, Strauss-Kahn said.

"We're not working on a Tobin tax at the IMF" because such a tax would risk being unworkable, he said.

"We're working on a tax on the financial sector which, in line with what Gordon Brown said, would solicit an insurance premium from a business activity that is riskier than others."

The IMF will present concrete proposals for the tax next April to finance ministers of the Group of 20 leading economies, for review before submission to G20 leaders in June.

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