GENEVA: UN trade and development chief Supachai Panitchpakdi on Tuesday defended the introduction of a European financial transaction tax.
"We think that it could help to regulate some of the particularly volatile short-term funds that can help to distort the currency values," said Supachai, secretary general of the United Nations Conference on Trade and Development (UNCTAD).
"So we are in favour of that," he added. The UNCTAD head also said that the tax was not the only way to regulate financial markets.
The European Commission in September proposed a tax on financial transactions (FTT) throughout the EU, partly intended to boost EU coffers.
An EU-wide FTT is unlikely to see the light a day as Britain, home to three quarters of the financial services in the EU, is opposed.
However, France is keen on pursuing a tax within the eurozone and President Nicolas Sarkozy on January 29 announced that France will if necessary go it alone and impose 0.1 percent levy on financial transactions in August.
Supachai's support for the tax comes ahead of UNCTAD's April 21 to 26 conference in Doha. The conference meets at ministerial level every four years to hammer out its work programme.
Supachai urged governments to intervene to limit speculation in capital, raw materials' and foreign exchange markets. "The spread of speculation is quite alarming," he noted, saying that "surveillance and regulation will need to be strengthened at all levels."
"Financial markets and institutions have become the masters rather than servants of the real economy, causing distortions in trade and investment, increasing levels of inequality, and creating a systemic threat to economic stability."
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