Tobin’s nice little earner

Commentators and policy makers are casting far and wide to try to find policies that may offer solutions to the banking crisis and the financial situation it has caused. One proposal (considered in two articles below) is the introduction of a Tobin tax. A Tobin tax is a levy on currency transactions and the argument is that this will act as a disincentive for short-term speculation and therefore force traders in financial and currency markets to look more at medium- to long-term rather than short-term gain.

Tobin’s nice little earner Guardian (15/10/08)
Make state capitalism pay its way Guardian (26/9/08)


1. Explain what is meant by a Tobin tax.
2. Assess the arguments for and against the imposition of a Tobin tax on currency transactions.
3. Discuss whether changes to the regulatory structure of currency markets may be more effective than the introduction of a Tobin tax.