Tax investors to finance bailouts

1 January 2002

An alternative proposal to debt standstill is to create larger bailout funds. Edwin Truman, a former Assistant US Treasury Secretary and head of the Federal Reserve, has called for a tax on international investments to create a US$300 billion International Financial Stability Fund administered by the IMF. Truman claimed that standstills were likely to “exacerbate the crisis and contribute to its spread to other countries”. An annual charge of 0.1 per cent on the stock of international investment would raise $25-$30 billion a year that could be used for bailouts.