France to push transactions tax, monetary reform in G20 (Roundup)

Jan 24, 2011, 12:11 GMT

Paris - French President Nicolas Sarkozy on Monday called for a tax on international financial transactions and reforms to the international monetary system in outlining his priorities for France's Group of 20 (G20) and Group of Eight (G8) presidencies.

'France is favourable to a tax on (international) financial transactions,' Sarkozy told a press conference in Paris.

France considered such a a tax not only 'moral' but also 'useful to dissuade speculation' and as a way of raising money towards international development, Sarkozy said.

At the same time, he recognized that there were 'big adversaries' against the proposition.

'We are therefore ready to discuss other solutions even if this tax seems to me to the best formula,' Sarkozy said.

France took over the presidency of the G20 last November and of the G8 on January 1.

Reforming the international monetary system, putting in place greater controls over international capital flows and shaking up international institutions to give emerging markets a greater say are among France's top priorities.

While stressing the need for reform of the international monetary system, Sarkozy said France was not challenging the role of the dollar as a world currency.

Several emerging markets have complained the dollar is too dominant.

'France doesn't want to question the dollar, which still plays an eminent role and must be a strong currency,' Sarkozy said.

'The dollar will remain an absolutely dominant currency,' he said. 'But a dominant economy doesn't mean a unique economy,' he said, announcing he would attend a seminar on the international monetary system in China in March.

France's G20 presidency would also tackle the issue of volatility in the markets for raw materials, such as fuel and agricultural commodities.

'France would also like the market for raw materials to be regulated,' he said.

'If we do nothing we risk food riots in the poorest countries,' he said, alluding to rising prices.

Also on France's agenda would be an 'enlarged' role for the International Monetary Fund in supervising international capital flows and imbalances in the monetary system.

France would also propose a 'code of conduct for the management of capital flows,' Sarkozy announced.

A successful G8/20 presidency is seen as crucial to the unpopular Sarkozy's chances for reelection as president in 2012 elections.

In 2008, France's successful six-month presidency of the European Union saw Sarkozy rally in opinion polls.

Sarkozy has cautioned the French to be realistic about what can be achieved in 12 months.

'Im sure we won't solve all the problems in one presidency,' he said.

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