THE STATE OF THE EUROPEAN UNION

THE STATE OF THE EUROPEAN UNION

of the Bretton Woods agreements, so that it

would discourage speculation while obtaining

resources to fund public goods and the services

of the welfare state. The FTT would be levied on

the buying and selling of any type of financial

asset: shares, bonds, currency, derivatives, and

so on. It can be easily implemented as the vast

majority of financial transactions are conducted

electronically. Moreover, with the FTT, the finan-

cial sector, which is exempt from paying VAT,

would help towards paying a part of the cost of

the crisis. It would also be a fundamental tool

for bringing world financial capitalism into line

and reducing wealth inequality.

The proposal that is pending approval by the

Council of the European Union consists of: a)

levying 0.1 percent on the financial transactions

in which any financial institution or private indi-

vidual located in any of the 11 participating

member states takes part; b) levying 0.01 per-

cent on the transactions of derivatives in which

any financial institution or private individual lo-

cated in any of the 11 participating member

states takes part. This means that the financial

transactions of non-participating member states

and third countries would also be taxed, pro-

vided one of the parties was located in one of

the 11 countries that have committed to estab-

lishing the FTT. Non-cross-border financial trans-

actions will also be taxed, provided they take

place in the 11 participating states. And c)

Channelling the money raised from the tax into

the European Union budget, proportionally re-

ducing the contributions to the budget of the

participating member states.

According to calculations by the European

Commission, the FTT could raise as much as 31

billion euros a year for the 11 participating

states as a whole. To put the figure into context,

it is roughly the yearly cost of unemployment

benefit in Spain. It is, then, very important that

the directive is approved once and for all, so

that it can be introduced in January 2016 as

initially planned.

It is also essential not to exclude derivatives

from the scope of the FTT, as it appears certain

member states are trying to do, since it would

substantially reduce income, as well as favour-

ing one type of financial instrument over the

rest without justification - above all bearing in

mind that derivatives are high-risk instruments.

Lastly, the FTT must become a new own re-

source of the European Union, as was suggest-

ed in the conclusions of the European Council

of 8 February 2013.

In particular, some thought could be given to

the income from the FTT being allocated to

funding productive and job-creating invest-

ments in the 11 participating member states,

within the framework of the European Fund for

Strategic Investments, so that the tax is truly su-

pranational and is not offset by reductions in

national contributions to the meagre commu-

nity budget.

Supervision of the financial system

Naturally, reinforcement of the supervision of

the financial system also takes the shape of

regulations and directives. Prominent among

them are:

– ��

Regulation (EU) 1093/2010, which estab-

lishes the European Banking Agency.

– ��

Council Regulation (EU) 1024/2013, estab-

lishing the SSM at the ECB. The SSM has

been in operation since the end of 2014,

which means that one of the conditions for

turning to the ESM for direct recapitalisa-

tions of banks has been met.

The second regulation grants the ECB the

legal capacity to supervise the 6,000 banks in