74 prof. Dr. casper de vries is program Director Risk Management at Duisenberg School of finance. www.dsf.nl WHaT Will HappEN To HiGH fREqUENcy TRaDiNG if a ToBiN Tax iS iNTRoDUcED, aND WHaT aRE THE coNSEqUENcES foR THE NaTioNS iN- TRoDUciNG (SUcH) a ToBiN Tax? (RoGiER koUWENHovEN , vRiJE UNivERSiTEiT) Of course a Tobin Tax will hamper high frequency trading. It will have several other negative implications. First of all, it will have a negative signaling effect on the market. Markets will become less informed. A Tobin Tax causes a reduction in transparency, which in turn results in difficulties for the market to value assets. Secondly, it raises the costs of our pensions and insurance as these rely heavily on trading financial products, often used for hedging purposes. DSF Expert column FSA members are asked to direct their themed questions to a DSF expert in every Fiducie publication. Read what our expert has to say about the theme of this issue. stabiliZing the system: in search for the weakest link WHERE SHoUlD REvENUES GaiNED fRoM THE ToBiN Tax BE USED foR? (kaSpER faaS, vRiJE UNivERSiTEiT) Collected taxes should generally be used to increase the budget of the government and not be allocated for specific purposes. aRE THE So callED BaRNiER pRopoSalS a coR- REcT Way of ENSURiNG THE iNDEpENDENcE of accoUNTaNTS oR aRE THE ExiSTiNG RUlES SUfficiENT? (MaxiME ScHMiTT, vRiJE UNivERSiTEiT) There currently is -and always will be- a conflict of interests in the accountancy sector. This conflict is simply inevitable. At the moment, there already exists job rotation within accountancy firms limiting the accountants’ dependence. There is a tradeoff between becoming better informed if one is longer on a specific job and being captured by the management of the firm one is supposed to audit critically. To WHaT ExTENT Will THE ifRS STaNDaRDS iMpRovE TRaNSpaRENcy aND REDUcE SySTEMic RiSk? (SJoERD kEilMaN, vRiJE UNivERSiTEiT) Market based valuation gives better information, but also requires better interpretation by the user. The interpretation has not kept up with the changes in reporting. An example is the Dutch pension system where liabilities are now discounted by the market based swap curve rather than the fixed 4% rate used before. This causes daily fluctuations in the solvency ratio of pension funds. Given the long duration of pension funds, one should then not immediately act on these fluctuations. The opposite, however, has happened by using the old interpretation. With a fixed rate, high liabilities would not disappear as interest rates would move. HoW SHoUlD coRpoRaTioNS coNTRol iNTER- Nal fRaUD aND ExcESSivE RiSk? (laURa DElacoURT, UNivERSiTy of aMSTERDaM) In general, this is the role of the accountants. They are responsible set up controls and thereby prevent internal fraud and excessive risk. Besides that, corporations can alter the bonus structure to prevent excessive risk taking. Individual bonuses should be structured as long-term compensation methods. In the current situation, it is hard to judge which results are the accomplishments of specific individuals. In a longer time frame this becomes easier to judge. It will also prevent short term gambling. coNSiDERiNG THE opTioN of EURoBoNDS, HoW caN yoU GivE pooR pERfoRMiNG coUNTRiES THE iNcENTivE NoT To BoRRoW aGaiNST availaBlE cHEapER RaTES? (MaRc TiMMERMaN, UNivERSiTy of aMSTERDaM) Because the EU and euro is a treaty organization of equals, the EU lacks the hierarchical structure to discipline poor performing countries. If the European Union is structured like a federal government, certain hierarchical levels would be included. This way overconsumption by poor performing countries could be disciplined. In the current situation we cannot prevent over-borrowing against cheaper rates. For this reason, I believe that until we would move to a federal structure, where at the supra national level an euro parliament and government would be able to effectively control debt sinners, we should not issue euro bonds.
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