France wants proposed bank tax to cover hedge funds

A proposed new French tax on banks could also apply to hedge funds as part of an effort to ward off reckless behaviour, Finance Minister Christine Lagarde said yesterday.

"There has to be a taxation mechanism that makes bankers and other players more responsible," said Ms Lagarde in an interview to Canal+ television.

"In particular, financial players such as hedge funds could very well be subjected to this tax."

Ms Lagarde was returning from Berlin where she attended on Wednesday a meeting of the German Cabinet that agreed on imposing a new tax on banks for a fund that could be used for bailouts.

The French minister said France and Germany see eye-to-eye on taxing banks but that unlike Berlin, France wanted to put the new tax revenues in state coffers instead of a special fund.

French officials are still working out details of the new tax and have not yet spoken of a timeframe for enacting the measure.

European Union finance ministers are due to discuss the issue at a meeting on April 16 and 17 in Madrid. The European Commission has said it wants a "solution that is coordinated at the global level."

The United States unveiled plans for a bank levy that is expected to come into force in July.