The International Monetary Fund has proposed two new taxes on the banks. The proposal will be discussed at the G20 finance ministers meeting.

The two new taxes are "financial stability contribution" and "financial activity tax". While the "financial stability contribution" is a flat tax charged on all banks to generate self insurance fund equivalent to 4.5 per cent of each country's GDP, the second tax will be charged on the profits and remunerations of banks, which can be paid into general revenue.

The "financial stability contribution "is in line with President Obama's proposal to recoup the taxpayer's money.

As per a Credit Suisse report, the proposed tax would reduce the profit before tax by 20 per cent for the European banking sector. The report also said that the most affected stocks would be of RBS, Commerzbank, Dexia and Swedbank.

The Association for Financial Market in Europe has said that the present proposal would be like a punishment on the banks and would do little to reduce the risk.