Page last updated at 16:02 GMT, Wednesday, 31 March 2010 17:02 UK

German banks to pay into financial protection fund

Frankfurt skyline
Germany's banks must pay to protect taxpayers from future financial crises

The German government has approved plans to make banks pay into a fund to cover the costs of future financial bail-outs.

The so-called "stability levy", which is expected to raise about 1.2bn euros (£1bn), will be closely watched by other countries considering such moves.

Germany's finance minister, Wolfgang Schaeuble, expects to draw up the legislation by the summer.

Critics dismissed the levy as a bid to win favour ahead of regional elections.

The government in France is considering a similar levy, while in the UK, the Conservative opposition says it will introduce a fund if it wins the forthcoming general election.

Britain's Labour government imposed a one-off tax on bonuses in financial sector, but has stopped short of imposing a levy on banks.

Mr Schaeuble said the German fund would raise enough money to limit future risks without doing "damage to banks' ability to encourage the process of economic recovery or restructuring".

Germany's opposition parties say the fund will bring in too little money and have dismissed the plan as a political gambit ahead of an important regional election in May.

France's Finance Minister, Christine Lagarde, said that the German plans "will be very useful to us" in considering French responses to the financial crisis.

"We are fundamentally in agreement on the objective - making [banks] responsible.... to prevent systemic risks," she said.



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