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Germany

Bank levy passes German cabinet, heads for vote in parliament

Months after Chancellor Angela Merkel conceded defeat on a G8-wide fee for banks, the German government has approved a draft bill it says will stabilize the banking system and protect taxpayers from paying for bailouts.

Man walks into Commerzbank

A bank's fee would be based on its risk-taking

German Chancellor Angela Merkel's cabinet approved plans for a new fee on banks Wednesday, preparing to send the bill to a vote in parliament before the end of the year.

The draft bill hopes to stabilize the banking system by charging higher fees for banks who engage in riskier behavior.

The law could bring in more than 1 billion euros ($1.27 billion) per year, which would go into a fund to help bail out banks in the case of another financial crisis.

France and Britain have collaborated on similar laws with Merkel, who brought the idea up to other global leaders at a Group of 8 summit in Canada in June but failed to gather broad support.

Multi-front opposition

The law has gained criticism from several fronts, including economic analysts, who have said the fee must be adopted on a global level to truly stabilize the world financial system.

Savings and loan institutions have also opposed the bill, claiming that the most recent crisis has already punished banks, and that they have since modified their own policies to protect against crises.

And opposition parties have also attacked the draft law, saying it is too low and that banks would pass on the costs to consumers.

But German private banks - including the nation's largest, Deutsche Bank - have supported the law, saying it would shore up bankruptcy proceedings for the German banking sector.

Author: Andrew Bowen (AP/dpa)
Editor: Martin Kuebler

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