FRANKFURT — Imposing a tax on banks as a means of reducing risk to the financial system is an “inferior instrument” German central bank head Axel Weber said Friday. In a reference to a recent German government decision to ban naked short selling of certain securities, Weber said “the complete prohibition of certain activities is a very far-reaching market intervention, especially since these activities do not necessarily have zero economic value-added. Germany’s financial regulator BaFin last week unveiled a ban on naked short-selling of certain stocks, eurozone government bonds and credit default swaps, a kind of protection against default by state borrowers. Naked short selling occurs when an investor sells a stock or other asset he does not own or has not even borrowed, aiming to buy it back later at a lower price to pocket a profit. read more

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