by Marzia De Giuli
MILAN, Italy, June 21 (Xinhua) -- An EU proposal for a global bank tax to help pay for bailouts of financial institutions would hurt accessibility of loans and other services, a senior economist said.
"By proposing the same tax for everybody, each country is trying to protect its own banks," Mario Deaglio, a professor of international economics at the University of Turin, told Xinhua in an interview.
The EU proposal is on the agenda of the G20 summit on June 26-27 in Toronto, where world leaders will discuss ways to consolidate the recovery of the global economy in the aftermath of the financial crisis.
"Only those banks which made big mistakes should be heavily fined or declared bankrupt, in the same way oil giant British Petroleum (BP), and not all petroleum companies, is being punished for the terrible disaster it caused in the United States," he said.
In Deaglio's view, China will play a key role at the summit. "China is interested in pursuing a collaborative attitude, but it could not allow its domestic policies to be ruled by external factors," he said.
"Last week, U.S. President Barack Obama said in a letter that we must act together to strengthen the recovery, at the same time completing the work of financial repair and reform. This is what we need, but magic wands are not easy to find," Deaglio said.
He said EU countries' policies of cutting expenditure without raising taxes would negatively affect industrial growth and endanger the recovery.
"Nobody possesses quick recipes to come out of the financial crisis, but I think we should all accept higher inflation rates, while trying to keep them under control," he said.
He said he agreed with Olivier Blanchard, chief economist at the International Monetary Fund (IMF), who recently said the Western world should give up its goal of limiting currency devaluation to 2 percent and accept an inflation rate twice as high.
Deaglio said Italy's economic system was altogether sustainable, due to the high household savings rate and the black economy, which was a bad thing but could help sometimes to find a balance.
"Italy is like an old flat-bottomed boat. When things are going well, it is not able to keep pace with the other countries, but in bad situations it's probably more stable."
But this might be not enough to avoid the risk of contagion from the Greek crisis, Deaglio said.
"Italy's industrial output fell 25 percent due to the effects of the financial crisis and it starts now to slowly recover," he added.