The Tobin tax, named after Professor James Tobin of Yale University, who proposed it in the seventies, would apply a minute percentage levy to all foreign exchange transactions, with the idea of damping down currency speculation. It was recently resurrected by French prime minister Lionel Jospin to the great delight of the anti-globalisation movement, and even formally discussed at high level in the EU; but a series of politicians and economists, even including Professor Tobin himself, have said that it is unworkable in the modern, liberalised world economy.

George Soros argues that there are too many problems about whether to tax derivatives, how to collect the tax, whether collection should include tax havens and whether to enforce the tax. This has also been the position of the British government. He adds that reducing currency speculation might increase volatility in the currency markets by giving increased weight to large mergers and acquisitions. Further, he suggests that, if the concept of a Tobin tax is designed to redress the favoured position enjoyed by global financial capital vis-a-vis other sources of capital, the tax ought to be applied to all financial transactions.

As an alternative, Mr Soros suggests that developed countries should authorise the issuance of special drawing rights, which would be apportioned to developing countries depending, among other things, on how well their governments behaved. Would he perhaps like to be on the panel that decides what constitutes 'good behaviour', which is probably even more difficult to define than bad behaviour?

Many EU politicians have seized upon the renewed interest in the Tobin tax as a stick with which to beat speculators in general and hedge funds in particular, arguing for increased controls on the ability of hedge funds to take aggressive market positions. Mr Soros would no doubt say that this would have exactly the opposite effect to what is intended. 'Come on, make my day!' would be the answer of the offshore fund managers whose profits would grow in direct proportion to the level of EU controls.