INTERNATIONAL BONDS AND
THE DRAFT DIRECTIVE ON TAXATION OF SAVINGS
A paper by the United Kingdom
III. EU tax and economic reform
IV. Tackling tax evasion
V. The main features of the international bond market
VI. The risks to the international bond market from
the current draft directive
VI a: Financial market uncertainty
VI b: Competitiveness and innovation in financial markets
VI c: Administrative costs
VII. Approaches for amending the draft directive
INTERNATIONAL BONDS AND THE
DRAFT DIRECTIVE ON TAXATION OF SAVINGS
1. At ECOFIN on 25 May, the Chancellor of the Exchequer promised that
a UK Paper would put forward approaches to the draft Savings Directive
designed to safeguard the competitiveness of EU financial markets.
The approaches outlined in this Paper take into account both the way
in which the bond markets operate and the objectives of the Directive,
consistent with the Council conclusions of 25 May.
2. The ECOFIN Council of 1 December 1997 held a wide-ranging debate
on a Commission Communication entitled 'A package to tackle harmful
tax competition in the European Union'. This followed discussions
first initiated by the Commission at the informal ECOFIN in Verona
in April 1996.
3. The discussion concerned the need to tackle harmful tax competition
within the European Union in order to help achieve various objectives
- reducing the continuing distortions in the single market;
- preventing excessive losses of tax revenue and
- encouraging tax structures to develop in a more employment-friendly
4. Following that debate three areas were highlighted: business taxation,
taxation of savings income and cross-border interest and royalty payments
5. On taxation of savings, the ECOFIN conclusions noted that:
"To ensure a minimum of effective taxation of savings income within
the Community and to prevent undesirable distortion of competition,
the Council calls upon the Commission to present a proposal for a
Directive on the taxation of savings."
6. The UK Government has made clear that it fully supports the need
for enhanced co-operation in the fight against tax abuse and evasion.
However the UK also notes two important elements of the December 1997
Council conclusions concerning any Directive on the taxation of savings:
"The provisions of such a Directive should take into account the
need to preserve the competitiveness of European financial markets
on a global scale" and, consistent with this,
"The United Kingdom delegation considers that such a Directive should
not apply to Eurobonds and similar instruments."
7. These two elements have been consistently argued by the UK in Council
Working Groups and at Council meetings. The UK therefore notes the
ECOFIN Council Conclusions of May 25 on the Savings Directive where
the relevant section on International Bonds reads:
"The Council recognises the treatment of interest paid on international
bonds as provided for under the Draft Directive might give rise to
problems regarding competitiveness of financial markets, in particular
wholesale markets. Member States are prepared to consider the possibility
of a compromise solution that takes into account the way the bond
markets operate and the objectives of the Directive. Pending clarification
of the UK position on this issue, however, the Financial Questions
Group was not yet able to conclude its examinations as requested."
III: EU tax and economic reform
8. The UK approach to EU taxation issues was summarised by the UK
Prime Minister shortly before the Vienna European Council:
'our objective is a reformed European economy which combines high
employment, economic dynamism and social justice.'
This echoes the conclusions of the Cardiff European Council, for
'to promote growth, prosperity, jobs and social inclusion'.
9. Competitiveness is now the key for EU business in a global economy
where capital moves far more freely than before. Any proposals on
tax must match-up to the challenge of building European competitiveness
and jobs. And any proposal must therefore take account of the need
for efficient capital markets in the EU. These markets, including
the international bond market, form an important part of the foundation
for increased job creation, greater investment and higher productivity.
10. It has long been the UK view that the effect of the Savings Directive,
as currently drafted, would be to risk undermining the competitiveness
of EU financial markets at a time of great opportunity for Europe.
It risks the relocation to non-EU centres of a large, liquid and efficient
EU-based international bond market which has the potential to rival
the depth and breadth of the US capital market, which has played such
a key role in maintaining the growth and expansion of the US economy.
This, in turn, risks EU companies being placed at a competitive disadvantage
relative to their international competitors.
11. This risk to EU financial markets comes at a time when the Commission
have put forward an Action Plan on 11 May 1999 on 'Implementing the
framework for financial markets'. This followed an initiative during
the UK Presidency, including by the Chancellor of the Exchequer at
the York Informal ECOFIN and by the Prime Minister at the Cardiff
European Council. When this was discussed at ECOFIN on 25 May, the
Council strongly supported the Action Plan as a substantial step towards
a single market in financial services which will bring significant
- better choice and security for consumers;
- better pension prospects for those in work today;
- easier access to funding for Europe's businesses; and
- for the economy as a whole, enhanced growth and more jobs.
IV: Tackling tax evasion
12. The UK Government has made clear that it fully supports the need
for enhanced co-operation in the fight against tax abuse and evasion.
13. On the international front the Government has:
- worked actively to secure the OECD ministerial agreement to tackle
harmful tax practices, including the activities of tax havens; and
- in the UK Presidency, promoted and seen to a successful conclusion,
a G7 Initiative which seeks better flows of information from money
laundering authorities and better information from tax havens.
14. The single most effective means of tackling tax evasion is through
exchange of information on as wide an international basis as possible.
This is the first best solution in effectively targeting international
tax evaders. But continued insistence on out-dated arguments for banking
secrecy in some Member States and in (important) third countries is
preventing a solution to tax evasion based on exchange of information.
Banking secrecy is an issue that the UK believes should be addressed
more widely both within the EU and the OECD.
15. As the OECD's Report on Harmful Tax Competition notes: "provisions
which unduly restrict access by tax authorities to banking information
required for the assessment of taxes are a serious impediment to...
- "the fair and effective implementation of tax rules; and
- "may distort the allocation of financial flows between countries
by providing an unfair competitive advantage to those financial
centres which operate such provisions".
16. But, there are other arguments too why exchange of information
is preferable to a directive which provides Member States with the
option of operating a withholding tax:
- exchange of information allows the right amount of tax to be
paid to the right country;
- a withholding tax will not normally produce the right amount of
tax from the investor. The 20 per cent withholding rate is unlikely
to be the marginal rate at which the investor should be paying tax
in his state of residence. The honest investor would disclose the
income to their tax authority. The dishonest investor will not and
will continue to evade (some) tax;
- withholding also means that the tax is not paid to the correct
country ie. where the taxpayer is resident. That is why Denmark,
Netherlands and Sweden have been arguing for Revenue Sharing. The
UK believes that this is an issue which requires further work by
the Commission and the Council.
- withholding can involve complex calculations, particularly if
it is being applied to an accrued interest or where it is necessary
to give double taxation relief, ie to give relief for any third
country withholding taxes which have already been applied;
- with exchange of information it would be sufficient to draw the
attention of the country of residence of the investor to the existence
of the income-producing asset - the tax authorities could then seek
sufficient information from the investor to work out the tax liability.
- exchange of information draws the attention of the country of
residence to the existence of an asset. Often the money used to
buy an asset will have arisen from activities which themselves have
been hidden from the tax authorities. In turn, these activities
too could now be taxed.
17. In the absence of exchange of information on as wide an international
basis as possible, any directive will need to focus on those elements
of tax evasion which can be tackled and in a way that does not have
damaging side effects. The risk with the current draft Directive is
that it will neither effectively tackle tax evasion nor prevent excessive
loss of revenue because evasion of tax on income from savings will
simply be achieved through third countries. In the UK view, third
countries are very unlikely to apply equivalent measures, regardless
of the eventual coverage of the Savings Directive. But in attempting
to meet its declared objectives, the draft directive risks serious
damage to EU financial markets and, in particular, the international
V: The main features of the international
18. International bonds have the following main characteristics. They
are: issued by large companies, national and local governments and
international organisations such as the World Bank and European Investment
Bank; denominated in any currency; marketed mainly to international
investors through syndicates of international intermediaries; not
subject to deduction of tax at source from interest payments (although
it should be noted that not all pay interest; some carry discount
only or a mixture of discount and interest); and issued in bearer
form (usually a global note) but largely held within electronic central
19. The international bond market:
20. The international bond market is overwhelmingly an institutional
market. In terms of investors, the bonds are predominantly held and
traded by large institutional investors such as pension funds, insurance
companies and collective investment schemes. The growth in the value
of the market - about 14 per cent a year since 1989 - indicates the
strong and rising demand for these investments. In 1998 almost 1,000
billion euros were raised on the international bond markets.
- is the largest fixed income capital market in the world; over
4,000 billion euros of bonds are outstanding; almost half of these
are EU based borrowers(1).
- is a wholesale market: it is estimated that 90 per cent of bonds
are held by institutional investors . Of the 10 per cent held directly
by individuals, it is estimated that only about one half are held
by EU residents(2). Bonds are traded
on the secondary market, but are more often purchased and held to
- is successful because it provides EU borrowers with access to
a very large, liquid, low-cost pool of funds, and provides investors
with good returns, and an opportunity to spread risk over a range
of currencies, countries and credit ratings. The size and liquidity
of the market means that both borrowers and investors can achieve
- has bonds with a typical life of 5-10 years;
- has three major centres: London, New York and Tokyo, with London
handling 60-80 per cent of primary issuance and about 75 per cent
- over 100,000 jobs depend on the international securities market
in London alone. Paying agents and custodial services, which would
be most directly affected by the Directive, employ over 6,000 people.
21. There are at least two reasons why the international bond market
is likely to expand still further in the years ahead. Within the euro
area the removal of currency risk is expected to lead to increased institutional
investment, particularly as companies and individuals make provision
to fund currently unfunded pension liabilities. In addition, it is expected
that non-EU investors will give greater euro weighting in their portfolios
because of the reduced cost of holding, and hedging, one currency rather
than eleven. This increased demand for euro denominated investments
will be an important factor driving the further development of the EU's
capital markets. Secondly, as EU governments maintain tighter fiscal
control over their budget deficits, government issuance of EU sovereign
debt is expected to decline. This, in turn, is expected to boost institutional
demand for international bonds not issued by Governments.
22. On the supply side, the international bond market is used by issuers
(governments, corporates, financial institutions, mortgage banks, etc.)
from across the EU to raise capital. In the euro area, the elimination
of currency risk is expected to encourage EU companies, including small
and medium sized companies, to switch away from more expensive bank
borrowing to cheaper and more competitive funding from the capital markets.
In the first half of 1999 alone, it is estimated that almost 800 billion
euros was raised on the international bond market and about 44 per cent
of this was in euro-denominated debt(3).
VI: The risks to the international bond market
from the current draft directive
23. Apart from the cash-flow costs to investors of a withholding tax,
the potentially damaging effects on the international bond market
and on investment more widely from the current draft of the directive
come from a number of sources. These include: financial market uncertainty;
loss of competitiveness and reduced financial market innovation. This
section looks at each of these elements in turn.
VIa: Financial market uncertainty
24. A huge risk inherent in the current draft of the directive is
'gross-up' and 'call' of existing bond issues. Typically international
bonds include a clause which commits the issuer to compensate the
investor ("gross up") for any tax withheld by the issuer's State.
But usually the issuer can instead choose to redeem ("call") the entire
issue at its par value.
25. Given the significant decline in interest rates across the yield
curve which has occurred over the last few years, issuers are more
likely to choose to call outstanding bonds. This would be a logical
step. They would avoid the cost of grossing up and have the potential
to make large windfall gains. The significant reduction in interest
rates means that they could refinance at considerably lower interest
rates, and thereby increase returns to shareholders. One or two large
issuers have already signalled their intention to call should the
directive be implemented as it currently stands.
26. If a large number of issuers called bonds it would lead to massive
market disruption and uncertainty. It is estimated that between 80
per cent and 90 per cent of fixed-rate international bonds are trading
above par (100), with some of the longer dated, high coupon bonds
trading up to 20 per cent above par.
27. This would not only affect liquidity in international bond markets
but it would be exacerbated by the effect on liquidity in the derivatives
market. Derivatives are routinely used, in parallel with bond issues,
to hedge the holdings of bonds. The resulting loss of confidence by
investors in both the bond and derivative markets could take many
years to undo.
28. The scale of this problem is huge. There are a large number of
institutional investors who have wide-ranging investment portfolios
including bonds with many different forms of gross-up and redemption
clauses. There is no easy way for investors to know what their precise
exposure is to these 'gross-up' and 'call' provisions. Even with the
benefit of substantial legal advice the position, in many cases, will
be unclear. The problem is that a gross-up clause triggered on just
one individual holding of a bond could lead to the whole issue being
subject to call. Even though EU individuals only hold a small proportion
of the outstanding value of the bonds, the distribution of their holdings
is thought to be very broadly based.
29. It has been suggested that withholding tax under the Directive
would not generally trigger gross-up clauses, because those clauses
usually only apply where the issuer and the paying agent are in the
same State and the recipient in another. But a detailed study by the
London Investment Banking Association and International Primary Markets
Association indicates that, even after taking account of this, at
least 170 billion euros of current EU issues could still be subject
to gross-up and hence early redemption. It should be emphasised that
this estimate is based on the most conservative assumptions based
on UK law only and the actual figure could be considerably higher.
The reason for the high level of uncertainty is that the terms of
bonds can vary widely. In each country of issuance whether gross-up
would be triggered would depend on the precise legal interpretation
of each clause.
30.On that narrow assumption, the loss to both individual and corporate
investors (and the corresponding gain to issuers) has been estimated
to be in the range from 7.5 billion(4)
to 18 billion euros(5), but it could
be even higher. Much of this cost would be borne by pension funds
and by financial institutions with long term exposure. This could
affect the level of contributions or premiums to be paid to achieve
defined benefits. It could affect the solvency of some providers.
It would also reduce the money available for pensioners. This would
represent a huge, entirely arbitrary and unprecedented transfer of
funds from investors to issuers, with pensioners bearing most of the
31. Some have suggested that gross-up could be avoided if tax withheld
was later repaid, or if an Article 9 certificate was provided. However
this would not solve the problem. Gross-up clauses do not cease to
apply if the tax is later repaid. And while a certificate might avoid
withholding in many cases, just one case of tax being withheld through
absence (or lateness) of a certificate would be enough to jeopardise
the whole issue.
32. It has been suggested too that the problem could be avoided by
changing the terms of bonds. And there is evidence that new issues
of international bonds are being documented in a form which would
circumvent the directive. But large amounts remain outstanding on
existing bonds, and the terms of existing bonds cannot normally be
changed retrospectively particularly, as here, where the interests
of issuer and investor may diverge so significantly.
33. The point then is how this disruption can be avoided. Potential
early call of bond issues and resulting market disruption can only
be avoided via a "grandfathering" provision for existing issues whereby
all international bonds in existence on the date at which the Directive
is implemented would be exempt from its provisions.
34. Partial grandfathering, for example, as some have suggested, to
cover only bonds with gross-up and call provisions could still lead
to widespread market disruption. Considerable legal uncertainty would
result as issuers and investors argued over the status of bonds, and
the likelihood is that it would all be fought out, over a long period,
at great expense, in the courts. Partial grandfathering would also
lead to market fragmentation, creating a two-tiered market in exempted
and non-exempted bonds, with all the associated market inefficiencies
reflected in bond prices and liquidity.
35. An example of the introduction of a withholding tax and its impact
on the market is when the US decided in 1987 to terminate the US-Netherlands
Antilles tax treaty. As a result, $32 billion of outstanding bonds
issued through companies in the Netherlands Antilles became subject
to a withholding tax. After the price on these bonds fell by an average
of 15-20 per cent, the US government announced, within two weeks,
that interest paid to residents of the Netherlands Antilles was exempt
(i.e. companies incorporated in the Netherlands Antilles were therefore
36. The proposed directive is already having an impact on the market
- there are signs of movement and evidence of nervousness which is
reflected in the behaviour of investors and issuers. Swiss bankers
have been reporting unprecedented capital inflows since the Spring
of last year.
37. Uncertainty about whether and when the Directive will be adopted,
what it will cover and what obligations it will entail for whom, is
leading to adjustments in the terms of new bond issues with the aim
of leaving them squarely outside the Directive. (New issues of international
bonds are now largely being set up with the option of Swiss paying
agents to ensure that the Directive will not apply). Continuing uncertainty
is also likely to lead investors to demand higher returns, and this
in turn will increase the likelihood that borrowers will look for
alternative sources of finance outside the EU.
38. The overwhelming consensus among those involved in international
bonds business is that the risk of damage to the EU financial services
industry is very grave.
VIb Competitiveness and innovation in financial markets
39. Of critical importance to capital markets is the ability to operate
in an environment which is efficient, predictable and low cost. Many
international financial centres have already learnt that the imposition
of a withholding tax which is not matched by other financial centres
serves only to encourage the industry to move elsewhere. The recent
global trend has been to announce the removal of withholding on non-resident
bonds (e.g. Japan, Australia and Greece). And it should be remembered
that the market developed in Europe in the 1960s following the introduction
of the US Interest Equalisation Tax (IET) in 1963.
40. The international bond market has a tremendous capacity for innovation,
with issuers and corporate financiers constantly seeking out the most
competitive and economically tax efficient way of raising and distributing
capital. It thrives on innovation, competition, speed and flexibility;
the imposition of a new constraint or boundary, no matter how wide
it may appear, is likely to restrain and restrict market innovation.
41. The current international bond market, based in the EU, permits
investors and issuers to choose where to place their funds and where
to issue their bonds. Procedures that slow down transaction speed
and increase the cost of issuance and trading will reduce market flexibility.
For participants the effect of the directive as currently drafted
would be to change the nature of the market. It could become:
- relatively difficult and costly (with the parameters of the Directive:
too wide in coverage; too restrictive for market innovation; and
too costly in terms of administration) and
- simply, just inconvenient.
Instead of tapping the international bond markets through EU financial
centres, the participants and the market are likely to go elsewhere.
42. Indeed there is no reason, other than competitiveness, why any
of the activities connected with the international bond market must
remain in EU financial centres. If other financial centres gain a
competitive advantage the market will migrate. This risk is particularly
43. Given the synergies and the integrated nature of financial market
activity, there is also a significant risk that if the international
bond business migrates then other financial business could follow, taking
with it a substantial pool of expertise, skills and jobs.
- the significant and continuing advances in electronic trading
and settlement technology;
- the increased globalisation of banks and securities firms which
means that firms already have branches in the major non-EU financial
- the very high capacity for innovation in international capital
markets which means that firms are continually consolidating activities
and seeking out the most cost effective and tax efficient way of
raising and distributing capital; and
- the keen competition for business from non-EU financial centres,
in particular, Swiss and US centres. Indeed, some non-EU financial
centres have already been preparing for greater business by amending
legislation and increasing the capacity of their trading and settlement
VIc Administrative costs
44. The directive as currently drafted would have a significant impact
on the operating costs of paying agents. The paying agent business
is particularly vulnerable because it is a business characterised
by very low margins and very high volumes. Even a small increase in
unit costs, therefore, may have a dramatic impact on margins and hence
45. For example, the paying agent does not now generally need to:
track the issue price of bonds held or Collective Investment Vehicle
(CIV) holdings; know the investment profile or amount of underlying
tax borne by a CIV; account for tax; or collect information.
46. Paying agent business is already subject to global consolidation
trends. The directive will encourage issuers to appoint non-EU based
paying agents to circumvent the directive. This means that operational
and middle and back office jobs in the EU paying agent business are
immediately at risk. There is, therefore, a significant risk that
the EU will lose it pre-eminent position and some or all of its current
international paying agents and, given the integrated nature of this
business, depositary, custody and other associated financial activities
are potentially vulnerable to re-location.
47. The costs of applying the Directive would vary according to the
final details of the Directive. But the increased costs would fall
into three categories:
- the costs of changing IT systems,
- the one-off administrative costs of introducing the Directive;
- the continuing extra administrative costs of applying the Directive.
48. These costs would be incurred in the first instance by custodians.
There are 15 such operators (though not all of the same size) operating
in the UK market at present. However, the systems (IT and administrative)
which would have to be set up would not be confined to custodians
but all participants who make interest payments direct to individuals.
A much wider group would need to have the ability and therefore the
systems capability to operate similar procedures. There is a risk
that this could multiply the overall costs of implementing the draft
directive or narrow competition in some sectors of the market; reducing
competition and choice.
49. It has been objected that relatively few international bonds are
held by individuals. But, the important point is paying agents would
have to apply some of the Directive's procedures to every payment
- retail or wholesale.
50. In order to retain the paying agent and associated activities
in the EU it will be necessary to minimise the impact on the wholesale
market in international bonds. The May 1999 ECOFIN conclusion recognised
the importance of the wholesale market activities such as issuance
and trading not being hindered or adversely affected by the provisions
of the Directive. Given that almost all bond issues will, even in
small part, be held by individuals, there is considerable scope for
problems to infiltrate through to the wholesale system through higher
system costs, checking procedures which slow down the transaction
and trading process, potentially differing tax treatments between
different holders and the increased overall level of uncertainty.
The best way of dealing with this is to provide some exclusions from
the Directive which will minimise the extra costs for the wholesale
market while still pursuing the objectives of the Directive through
focussing on the main forms of investment of tax evaders.
VII: Approaches for amending the draft directive
51. As noted earlier, the UK believes that the single most effective
means of tackling tax evasion is through exchange of information on
as wide an international basis as possible.
52. To continue with the current approach of the draft directive will
make it necessary to define an international bond for the purposes
of securing an exemption from the directive.
53. Traditionally, the term "Eurobond" has been associated with transferable
bonds which have one or more of a number of characteristics, including:
- denomination in a currency other than that of the issuer;
- underwritten and distributed by an international syndicate;
- placed with investors in more than one country;
- accepted at one or more centralised securities depositories;
- free of tax at source.
54. However, most of the definitions based on this approach are
now out of date. For example, the term "Eurobond" would now not necessarily
be understood as excluding bonds denominated in the issuer's own currency,
if they were marketed internationally. As the ECB made clear at 25
May ECOFIN the distinction between eurobonds and domestic bonds is
breaking down, particularly in the single currency area where a "domestic"
bond is by definition denominated in an international currency, the
euro. Rather than trying to maintain an increasingly artificial distinction
between eurobonds and other bonds we think it is simpler to give the
same treatment to both and call them all 'international bonds'. Any
definition will need to be simple, practical and easy to understand.
55. The UK puts forward two possible approaches for amending the
56. Approach 1 would construct a definition for an exemption for
international bonds based on three elements. It requires:
a) that bonds in existence on the date at which the Directive
is implemented, will be exempt - so-called 'grandfathering';
b) all future issues, where the bonds are held in a clearing
system will be exempt from the terms of the Directive; and
c) for all future bond issues held outside a clearing system,
the Directive will only apply to holdings below 40,000 euros.
a) existing issues
57. For existing bonds, the only satisfactory way of avoiding
the serious market disruption outlined in section VI is a "grandfathering"
provision. All bonds issued before the coming into force of the Directive
would need to be excluded from its application. Although this would
initially be a wide exemption, it would have a limited life: 75 per
cent of bonds have a life of less than 10 years, and by 2004 about
two-thirds of bonds in issue today will have matured.
58. In this respect it is worth noting that this is by no means a
solely UK concern. A number of Member States and international institutions
are likely to ask for a similar, transitional, exemption for existing
b) and c) future issues
59. On the basis of the current wording of the draft Directive we
believe that a proposal which excluded all bonds held in clearing
systems and any large bonds holdings held outside clearing systems
could effectively protect the wholesale markets, as envisaged by the
60. The benefits of this approach are that it:
- provides an effective way of distinguishing the wholesale market;
- helps protect the competitiveness of the wholesale market by potentially
covering almost all bonds aimed at it;
- it will keep the great bulk of physical bonds held in physical
form by individuals within the scope of the directive;
- reduces the costs on EU paying agents; and
- follows the approach taken by the draft directive.
61. However, even if the Directive incorporates an approach along
the lines outlined above it will still be necessary to resolve a number
of other outstanding issues including the definition of an interest
payment, the definition of a paying agent, the issue of revenue-sharing
and the potential administrative burdens placed on Banks and other
paying agents. The acceptability of this approach will thus depend
on the final details of the Directive.
62. An alternative approach would be to change the way the current
draft Directive has been set out. Rather than starting by including
all forms of interest and then specifying exceptions, approach 2 would
instead list the forms of interest which should be included within
the scope of the Directive. This would avoid the need to define an
international bond for the purpose of an exclusion and would allow
the Directive to be targeted more specifically on the problem areas.
For example, if this approach were adopted the Directive might be
drafted to cover deposit taking business and perhaps consideration
could be given to including other retail instruments.
63. The benefits of this approach are that it would:
64. However, as with approach 1, the acceptability of approach 2 will
depend on the final details of any directive and the resolution of a
number of outstanding issues, including those issues referred to in
- maintain market competitiveness and the potential for financial
- give greater clarity on the instruments covered and would be easier
to operate; and
- could help to resolve many of the outstanding problems on the
draft directive with regard to the definition of interest and the
definition of a paying agent.
65. The UK Government is committed to tackling tax evasion. It therefore
supports the general aims of the draft Savings Directive. But, the
Government is of the firm view that the approach of the current draft
of the Directive will not effectively tackle tax evasion. It will
also have the unintended side-effect of seriously damaging EU financial
markets. This, in turn, would jeopardise the EU's programme of Economic
Reform. The UK Government therefore puts forward two potential approaches
for amending the draft directive to safeguard the competitiveness
of EU financial markets.
1. Source: BIS quarterly data from International
Banking and Financial Market Developments
2. Source: International Primary Market Association
3. either in euros or euro legacy currencies
4. International Primary Market Association (IPMA)
5. Centre for Policy Studies, London.