China central bank vice head says Tobin tax still at research stage

[BEIJING] A tax that China looks to introduce to combat currency speculation is still being researched, vice central bank governor Yi Gang said on Saturday, damping expectations of any imminent policy step.

China's central bank is studying the introduction of the so-called Tobin tax on currency transactions in an effort to curb speculation in the foreign exchange markets, Bloomberg has reported, citing unnamed sources.

"I think that the Tobin tax is still an academic subject," Mr Yi told reporters on the sidelines of a high-level economic forum. He did not give further details.

Mr Yi's remarks came after China's foreign exchange regulator said the country's capital outflows have started easing as the yuan stabilises, party due to the US dollar's broad retreat as expectations cool on further interest rate rises by the US Federal Reserve.

In October, Mr Yi said the authorities were studying plans to curb currency speculation, including a "Tobin tax".

Chinese offices have floated the idea of the Tobin tax, a scheme to penalise short-term currency speculators that was first proposed by Nobel prize-winning American economist James Tobin in 1972.

Capital outflows from China have been fuelled by concerns about its economic slowdown and expectations of higher US interest rates. That has prompted the central bank to intervene in the currency markets to support the yuan and crack down on forex trading it suspects to be speculative.

Analysts believe China's central bank still faces a tough job stemming capital outflows, especially as the world's second-largest economy faces persistent downward pressure.

Mr Yi told the forum that increased policy coordination among the Group of 20 nations will help promote global economic growth and ward off risks.

REUTERS