• Ross Buckley

24 March 2010Pressure is growing for a small but potentially very effective global financial transactions tax. But where is Australia in the debate, asks Ross Buckley in Inside Story

IN LATE 2008 the global financial system suffered a massive coronary. This is hardly surprising. It was born, so to speak, in 1945 and so was at an age where coronaries are common. What is remarkable is the system’s response: it made no substantial changes and kept feasting on doughnuts and french fries.

Internationally, the financial downturn has been the biggest economic crisis since the Great Depression. But in that earlier case, within four years the United States had completely transformed its banking sector and its system of financial regulation. By 1934 US banks were different entities, doing business differently under new regulatory regimes.

Today, two years after 2008, the only reforms are marginal: increasing bank capital here, tweaking a regulation or two there. The only substantial reform on the table is Paul Volcker’s proposal to prevent deposit-taking banks from operating trading desks and thereby speculating with the bank’s own money – and this would not have prevented the GFC...

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