Swedish Finance Minister Anders Borg said he wants his European Union colleagues to apply a levy on banks similar to the one being discussed by the U.S. administration.
"The financial system should pay for the actual cost it incurs to society and the taxpayers in the form of implicit state guarantees for systemically important banks," Borg wrote in a letter Tuesday to Spanish Finance Minister Elena Salgado, who chaired the EU finance ministers' regular monthly meeting in Brussels.
"A fee paid by financial institutions would help in our efforts towards budget consolidation, but also increase the legitimacy of our measures towards the financial sector in the public's opinion."
The U.K. Treasury will hold discussions Monday with officials from the International Monetary Fund, academics and other policymakers to discuss ways to reduce the risk of failures of systemically important banks, including a possible international levy on the banking industry, a U.K. Treasury spokesman said Tuesday.
The discussions will center on proposals in a Treasury document last month that said a well-designed levy on the financial sector appears an "attractive" option. The spokesman said, "We have said that any measures we consider would have to be … international, nondistortionary, enhance stability of the international financial system and fair."
President Obama announced a plan last week for a "financial crisis responsibility fee" to recoup taxpayer funds and reduce banks' risk-taking. The levy is seen raising $90 billion over the next 10 years, with around 60% of the revenue coming from the 10 largest financial firms. The U.S. proposal is for a fee of 0.15% of bank assets after subtracting tier 1 capital and Federal Deposit Insurance Corp.-insured deposits.
Several EU countries, including the U.K., Germany and Spain, initially said they were not considering a similar levy on banks. U.K. officials say they expect to recoup money from rescued banks when the state sells its shares.
But at the finance ministers' monthly meeting, Borg's proposal received slightly more support. Belgian Finance Minister Didier Reynders told his colleagues that countries should consider "various ways of making banks contribute to balanced budgets." He added that bank levies should be discussed at the next IMF meeting.
German Deputy Finance Minister Joerg Asmussen also suggested an international dimension to any bank tax, saying Germany "will look into the Swedish proposal."
A Swedish tax, which the government started levying last year, charges a permanent stability fee on banks and other credit institutions. It is levied on all of a bank's liabilities, excluding equity capital and some junior debt securities, at a rate of 0.036% a year. The proceeds are channeled into a special stability fund, which is targeted to reach 2.5% of gross domestic product in 15 years. Borg said in the letter that, as of Tuesday, the fund has reached an amount equal to 1% of the country's GDP.