China should take measures, such as the so-called Tobin tax, to deter currency speculators, according to central bank Deputy Governor Yi Gang.

The steps could include a punitive levy on foreign-exchange trades and the imposition of “handling” fees to counter short-term capital flows aiming for arbitrage, Yi wrote in an article in China Finance magazine, a People’s Bank of China publication. He is revisiting the Tobin tax idea after mentioning it more than a year ago.

His comments suggest the PBOC take greater control of the currency at a time when China is looking to satisfy the International Monetary Fund’s condition that the yuan be more freely usable before it can be admitted into the agency’s Special Drawing Rights basket. While the nation is opening up the interbank bond and currency markets to foreign central banks, it has introduced measures against bets on yuan declines after a surprise devaluation in August triggered the biggest monthly slide since 1994.

Nobel Laureate economist James Tobin first proposed the levy in 1972 after U.S. President Richard Nixon’s decision to abandon the dollar’s peg with gold pushed up global volatility. The tax has in the past been rejected by economies from Europe to South Korea because of the risk investors will simply take their business elsewhere.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD clings to gains near 1.0700, awaits key US data

EUR/USD clings to gains near 1.0700, awaits key US data

EUR/USD clings to gains near the 1.0700 level in early Europe on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data. 

EUR/USD News

USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data

USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data

USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday. 

USD/JPY News

Gold closes below key $2,318 support, US GDP holds the key

Gold closes below key $2,318 support, US GDP holds the key

Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.

Gold News

Injective price weakness persists despite over 5.9 million INJ tokens burned

Injective price weakness persists despite over 5.9 million INJ tokens burned

Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price. 

Read more

Meta takes a guidance slide amidst the battle between yields and earnings

Meta takes a guidance slide amidst the battle between yields and earnings

Meta's disappointing outlook cast doubt on whether the market's enthusiasm for artificial intelligence. Investors now brace for significant macroeconomic challenges ahead, particularly with the release of first-quarter GDP data.

Read more

Majors

Cryptocurrencies

Signatures