Financial transaction tax (FTT) has been discussed as a form of innovative financing for development. In 2010-2011 EU representatives urged the G20 to support its global introduction, but some of the G20 leaders, including those from the so called emerging powers (China, India, Russia), demonstrated considerable reserve. The EU nevertheless decided to go on with the implementation of the European FTT, its would-be revenue not being earmarked for the funding of global public goods. These circumstances gave additional impetus to the discussion of the (in)ability of the EU to act as a global leader.This paper aims to employ multi-level governance approach to spotlight the institutional context of the EU proposal. FTT is an important contribution to the much desired modification of the global financial system. But the 'liberal drift' of the European MLG construction is undermining the EU credibility as a normative power. The 'liberal drift' is perpetuated by the member-states' ill-preparedness to find agreement on positive integration measures to be introduced at the supranational European level. To avoid the deadlock, European institutions are trying other governance levels and arenas to arrive at decisions required (making them feasible for subsequent all-European implementation), and they endeavor to use the EU input in global development as an accompanying 'legitimizing' resource. By insisting on global and European FTT, which both target market-correction, the EU is likely to make its global normative power role more conclusive.
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