A step too far? The European financial transactions tax on shadow banking

Gabor, Daniela

Abstract

This paper focuses on the European Commission's proposals to include the repo market – a market systemic to European (shadow) banking – in the financial transactions tax (FTT). It asks why the FTT governments negotiating under the enhanced co-operation procedure quickly removed the repo market from the scope of the FTT. It argues that the European repo market, rather than a shadow market energized by regulatory arbitrage, as it is customary to portray it, grew out of a public–private joint venture before the crisis. Thus, regulators became deeply embedded – through their government bond markets and policy frameworks – in (repo) market-based finance. This convergence in public and private interests creates new trade-offs and ambiguous preferences that allow private finance to successfully mobilize resistance to reform, creating coalitions with public actors such as the European Central Bank.

• Journal Article Type: Article
• Online Publication Date: Sep 11, 2015
• Publication Date: Jul 1, 2016
• Journal: Journal of European Public Policy
• Print ISSN: 1350-1763
• Electronic ISSN: 1466-4429
• Publisher: Taylor & Francis (Routledge)
• Peer Reviewed: Peer Reviewed
• Volume: 23
• Issue: 6
• Pages: 925-945
• DOI: https://doi.org/10.1080/13501763.2015.1070894
• Keywords: Collateral, European Central Bank, financial transactions tax, repo markets, liquidity, shadow banking
• Public URL: https://uwe-repository.worktribe.com/output/908077
• Publisher URL: http://dx.doi.org/10.1080/13501763.2015.1070894