Justin is one of the most recognisable and trusted market commentators on television, radio, and in the press.
Originally trained as a lawyer, he has observed the retail market industry for 20 years whilst at Barclays Stockbrokers and developed a unique understanding of the market’s roles and benefits for the private investor.
Each week we will bring you Justin’s latest thoughts and commentry.
For a taster of this week’s article please continue to read…
Barking Banks and Tax The Financial Transaction Tax
Well it has been described as ‘insane’ and ‘ridiculous’ by both the head of the London Stock Exchange, Xavier Rolet, and Jim O’Neil the highly respected chairman of Goldman Sachs Asset Management. This is the new idea developed from the old concepts of the Tobin tax, which was originally proposed by economist James Tobin and defined as ‘a tax on currency transactions’. It was intended to put a penalty on short-term financial trading in currencies.
He originally proposed his currency transaction tax in 1972, shortly after the Bretton Woods system of monetary management ended in 1971. Before 1971, one of the chief features of the Bretton Woods system was an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency at a fixed value – plus or minus one percent. Then, in August 1971, United States President Richard Nixon announced that the US$ would no longer be convertible to gold, effectively ending the system. This action created the situation whereby the US$ became effectively the sole backing of currencies and a reserve currency for the member states of the Bretton Woods system, and this in turn led to the system collapsing in the face of increasing financial strain in that same year. In that context, Tobin suggested a new system for international currency stability, and proposed that such a system include an international charge on foreign exchange transactions. This would thus allow the authorities to have an income to pay for the increased regulation of the now proliferating foreign exchange trading markets.
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