IN CLASSIC European fashion the French and German governments are in agreement, but what they agree about is not absolutely clear. It seems Nicolas Sarkozy and Angela Merkel want the G20 to introduce a levy on all assets of banks and to tax financial transactions at a very modest rate. But it appears they will settle for the bank levy because they know that a tax on wholesale financial transactions is more ambitious and difficult to achieve.

This is a pity, for the world needs both. And if only one is available, we need a financial transactions tax more. Puzzlingly, the Australian government seems to want neither.

One of the challenges of discussing these options is that different people mean different things when they call for a “levy” on banks. In essence, this is a very low tax, probably imposed on all financial institutions – not just on banks – and calculated according to...