Still another participant pointed out that the Tobin tax is just like a securities tax, which people have sought to eliminate, for example, in Japan. Finally, there were questions raised about the effectiveness of the tax. There was general agreement that measures to deal with the financial situation are a priority. One participant suggested that any fiscal stimulus be directed to the restructuring of the financial sector, so as to prevent further deposit runs. Another pointed out that government intervention will not suffice.
Markets are about trust, which can be restored only if there are real changes in the economy.
One key issue is whether market forces will be allowed to work freely. This is a highly sensitive issue. Participants noted that staffing constraints posed a major obstacle to repairing and managing the financial sector in Asian economies. Some central banks lacked the capability to enforce their prudential rules, such as limits on lending to an individual. However, it was also suggested that the problem may not be lack of adequate staff, as some of the central bank staff are highly qualified, but lack of supervisory independence, or political pressures.