HISTORIC PRESS RELEASE : Gordon Brown and President Sarkozy call for global banking compact [December 2009]

The press release issued by the Department for International Trade on 10 December 2009.

Gordon Brown and French President Nicolas Sarkozy have called for a “global compact” to regulate the banking sector and ensure financial institutions are operating on a level playing field across the world.

Writing in the Wall Street Journal ahead of the European Council meeting today, the two leaders said the compact should recognise the risks to taxpayers if banks fail and the imbalance between risks and rewards in the banking system.

They added that a one-off tax on bank bonuses should be considered as a priority as this year’s bonuses had arisen partly because of governments bailing out banks.

They said:

“We propose a long term global compact that will encapsulate both the responsibilities of the banking system and the risk they pose to the economy as a whole. Various proposals have been put forward and deserve examination. They include resolution funds, insurance premiums, financial transaction levies and a tax on bonuses.

“Among these proposals, we agree that a one-off tax in relation to bonuses should be considered a priority due to the fact that bonuses for 2009 have arisen partly because of government support for the banking system.”

The Prime Minister and President Sarkozy will be among the European leaders taking part in the two-day European Council meeting, which begins today in Brussels.