CURRENCY TRANSACTION LEVYAn innovative model for Micro – Financing

proposed by Prof. Dr. Norbert W. Knoll-DornhoffGeneral Secretary of WUSME WORLD UNION OF SMEs

The CTL is a proposal to harness some of The CTL is a proposal to harness some of the vast wealth of the foreign exchange the vast wealth of the foreign exchange

market through a very small levymarket through a very small levy– – just 0.005% on currency transactions.just 0.005% on currency transactions.

It would apply the levy to all wholesale or It would apply the levy to all wholesale or interbank transactions of ainterbank transactions of a

particular currency. It can be applied particular currency. It can be applied anywhere in the world, but would not anywhere in the world, but would not

require all countries to sign up.require all countries to sign up.

Problems getting finance

Banks preferences

SMEs, particularly in developing (low- and medium-income1) countries, have historically lacked access to financial products and services. Microfinance institutions have emerged to serve the smallest of these enterprises, while banking institutions have typically concentrated on large corporations.

Growth Constraints

How much could the CTL raise?

How much could the CTL raise?A CTL rate of 0.005% levied on all major

currencies would generate US$33.41 billion a year.

Would the CTL have negative side-effects?The CTL would apply only to the

wholesale foreign exchange market and would therefore not affect the

retailmarket or have an impact on

remittances from migrant workers.The percentage of the transaction taxed

under the CTL proposals is so low that it would not adversely affect the

market, while being high enough to raise substantial amounts of income.

Are there any examples of successful CTLs?

In May 2007, INTL Global Currencies, a City of London firm specialising in foreign exchange with developing

countries, ran a week-long trial of a CTL. In the process, it raised £4,000 for the charity Widows and Orphans

International.

WUSME Micro-Finance Modelwith 3 Banks

We propose a CTL Test - Projects with three (3) Banks:

One Bank can raise EUR 5.000,00 per week.

3 Banks

Per month...............................EUR 60.000,00

Test period: 6 month............EUR 360.000, 00

THE SMETFED

Proceeds of the CTL shall be lodged in a SMEs- Trust Foundation for Economic Development (SMETFED),

Rating of the CTL on all cross boarder currency transactions and use of proceeds shall be decided by a ”San Marino Commission on CTL” whose members shall be Government Representatives, Delegates of the San Marino banks, entrepreneurs and employees organisations and members of the Steering Committee of WUSME.

Use of CTL proceeds

SMETFED shall e.g. finance:

Overhead cost of WUSME and defined WUSME projects Micro-credits for SMEs and their employees Start-up equity financing for young entrepreneursSME projects in developing Countries

THANK YOU FOR YOUR ATTENTION