Because such flows are often driven by small differences in perceived rates of return at home and abroad, they could well be discouraged by a transactions tax. On the other hand, speculative flows that actually “bet” on a sharp movement in a currency, have rather large expected returns and are unlikely to be discouraged by the tax.
Trustworthy business standards are one of the most important forms of social capital. Trust is paramount to the efficient operation of financial markets. And financial markets are a key ingredient of a well-functioning economy. This trust includes confidence in the players involved—the people who run the companies, and those who watch them.