However, it would also be wrong to look on the assistance as an act of pure generosity. Underlying the solidarity was the realisation of our interdependence within monetary union and the imminent threat to the financial stability of the euro area as a whole.
The Tobin Tax proposal envisages a levy of uniform tax on all spot transactions in foreign exchange. The objective is to discourage a one-night stand by speculators in the foreign exchange market as the tax burden will be inversely proportional to the maturity of flows. Another economist, Dornbusch, seeks a variant of the Tobin tax, viz., to impose a tax on all cross-border flows.