Tax regime and debt markets An efficient tax regime should ensure that it does not create an impediment to the development of secondary debt market. Distortions may be created if, without clear justification, some participants are exempted from tax as compared to another, certain instruments are taxed while others are exempted and procedures for calculating tax or deducting tax at source distorts prices.
Further, membership in the EU facilitates some of the adjustment mechanisms – including totally free trade, full capital mobility, and considerable labor mobility 5 – that are frequently absent when a country dollarizes unilaterally. And EMU members do have a say in determining monetary policy.