China's foreign exchange regulator urges consideration of ‘Tobin Tax’
Yi Gang suggests considering applying tax to foreign exchange deals as a precaution against currency speculation
A leading financial regulator in the mainland has suggested the country could introduce a tax on foreign exchange transactions among other steps to guard against speculative capital flows amid further economic liberalisation.
Yi Gang, head of the State Administration of Foreign Exchange (SAFE), wrote in an article for the Communist Party theoretical journal Qiushi that China should “study in depth” the so-called “Tobin Tax” on financial transactions.
The levy gets its name from Nobel laureate James Tobin, who proposed it in 1972 as a means of reducing speculation in global markets.
Yi, in his article carried on the journal’s website, also called for studying measures including fees on foreign exchange trading and curbing short-term speculative fund flows.
The measures were mentioned in the context of “orderly pushing forward capital market opening, improving and perfecting the foreign debt management system and accelerating the advance of renminbi capital account convertibility”, Yi wrote.
“Persistently guarding against cross-border liquidity flow shocks is the key to good foreign exchange management.”
“Persistently guarding against cross-border liquidity flow shocks is the key to good foreign exchange management,” he wrote.