UK Urges G20 to Consider Bank Levy

ST ANDREWS, Scotland (Reuters) - Britain pressed the G20 on Saturday to come up with a plan to make banks pay for any future bailouts but one idea of imposing a global financial transactions tax was immediately shot down by the United States.

Meeting for the third time this year, Group of 20 finance ministers and central bankers made little progress on a deal on the cost of climate change after heated exchanges that did not bode well for next month's environmental summit in Copenhagen.

They did, however, launch a new framework aimed at rebalancing the global economy, committing to present detailed economic plans for each other to check by the end of January 2010 to ensure better policy coordination.

And they agreed it was too early to pull the plug on emergency economic support packages because the recovery from the global recession was uneven and dependent on ultra-low interest rates and the trillions of dollars thrown at the problem.

"We are not out of the woods yet," British chancellor and meeting host Alistair Darling said when the meeting ended.

While most of the conclusions had been widely expected, British Prime Minister Gordon Brown produced the day's biggest surprise, saying there was an urgent need for the G20 to look at existing proposals to impose a levy on financial institutions.

"We should discuss whether we need a better economic and social contract to reflect the global responsibilities of financial institutions to society," Brown said.

IMF LOOKING AT IT

The International Monetary Fund is already looking into this very issue for the G20 but Britain's intervention was striking given it has always previously backed away from supporting any global tax given London's pre-eminence as a financial center.

"There have been proposals for an insurance fee to reflect systemic risk or a resolution fund or contingent capital arrangements or a global transaction levy," Brown said, adding any of those would only work if globally implemented.