As the European sovereign debt crisis comes to a head, some members of the European Union are pushing to implement a financial transaction tax on an EU-wide, if not global, scale. The tax, which was proposed by German Chancellor Angela Merkel and French President Nicolas Sarkozy, has become a dividing issue with some countries, such as Germany and France, for it and others, such as the UK and Sweden, against it. Anthony Belchambers, CEO of the London-based Futures and Options Association (FOA), says there are two reasons France and Germany are calling for the tax. "As a politically driven initiative, the idea behind the financial transaction tax is that it will deliver on a number of largely politically oriented objectives," he says. "The first of which is to build up a cash bank, for obvious reasons. The second is to try and reduce speculation or any form of inappropriate trading in the marketplace by making it much more expensive."
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