Socializing Global Economic Governance: Introducing a Financial Transaction Tax

The uncontrolled exponential growth of the financial sector and its rapid globalization led to an equally rapid increase in challenges to the global financial system. The already undertaken measures aimed at improving financial stability are necessary, yet not sustainable enough. The aim of this article is to provide more analytical arguments to favour another solution – the introduction of the Financial Transaction Tax (FTT), and to increase the public and academic awareness of the necessity of such a measure. The ongoing reforms do not solve the key problem – the enormous cost to rescue the financial sector, subsidized to a large extent by the taxpayer, and the absence of a fair contribution from the financial sector. FTT as a tool to discourage excessive speculation without hindering other activities seems to be a socially responsible measure working for financial stability at the same time. To efficiently socialize its impact, however, it is critical to define exact patterns of spending of the funds raised by the states.