Open Economies Review

, Volume 7, Supplement 1, pp 493–499 | Cite as

A currency transactions tax, why and how

  • James Tobin


The crises and defections that afflicted the European Monetary System in 1992–93 are convincing recent demonstrations that adjustable pegs are not viable. At the same time, experience since 1971 has not fulfilled the more extreme claims of the advocates of floating rates. Transactions taxes are an innocuous way to throw some sand in the wheels of super-efficient financial markets and create room for differences in domestic interest rates, thus enabling national monetary policies to respond to domestic macroeconomic needs.

Key words

currency crises financial integration effectiveness of monetary policy transactions tax 


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  3. Tobin, James. (1978). “A Proposal for International Monetary Reform,”Eastern Economic Journal 4, 153–59.Google Scholar

Copyright information

© Kluwer Academic Publishers 1996

Authors and Affiliations

  • James Tobin
    • 1
  1. 1.Yale UniversityNew Haven

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