Re: Tobin tax

[Trond Andresen <trond.andresen@xxxxxxxxxxx>]

This is a belated response to Henry C.K. Liu, who in one message made a
point (if I have understood him right) that a Tobin tax can easily be
circumvented, as long as there are some market(s) anywhere in the world that
trade in securities denominated in the currency under consideration.

But it seems to me that there is a measure that can block such a possibility
for circumvention. Let me use Norway and trade in our currency, kroner
(NOK), as an example.

Assume Norway adopts a Tobin type tax, hopefully
synchronised with a number of other countries.
At the same time a law is adopted that prohibits Norwegian banks and
licenced financial institutions to do business with any foreign bank or
financial institution that trades securities denominated in NOK.
A foreign bank that is blocked from doing business with
Norwegian banks, cannot persevere in trading NOK securities.
This implies that all trading in NOK-denominated securities
must/will move to institutions within Norway. All trading in NOK
currency and NOK-denominated securities must abide by rules given by the
Norwegian Central Bank, regularly report to the NCB,
under penalty of fines, or even revoking of the
licence to do financial business - a potent threat.

Any comments?

Trond Andresen