The head of the International Monetary Fund said on Friday that he would propose an “insurance premium” for the financial system so as to cover any eventual new crisis.
“What we are trying get across (to help limit the damage of any future crisis) is that the financial system is a risk system,” Dominique Strauss-Kahn told France 24 television.
“What we must avoid is the profits going only to the private sector while any losses have to be taken by society as a whole,” Strauss-Kahn said.
The financial sector should pay an insurance premium to provide for the times when the system fails to work, he said.
This insurance premium, together with accumulated funds, should mean the financial system can cope with any future crisis without having to ask for a bailout from the taxpayer, he said.
“We are going to submit fairly detailed proposals on this … in the weeks ahead, in April,” he said, referring to a regular IMF meeting in Washington that month.
“This idea is beginning find support — I would not say a consensus — from our partners.
“We need a solution which will be the same everywhere. We need a global solution… with contributions the same across the whole (financial) system,” he said.
Following the worst global slump in decades sparked by the near collapse of the financial system, there have been many proposals for ways to prevent the excessive risk-taking by the banks that many see as the root cause.
So far, no one single idea has emerged, with many countries offering different solutions.
US President Barack Obama promised earlier this month to cut the US banks down to size and ensure their riskier activities were ring-fenced but his plan got a mixed reaction.
