LONDON (AFX) - Bundesbank president Ernst Welteke rejected calls to introduce a global tax on speculative capital flows - the Tobin tax - as unworkable and certain to increase the cost of international trading. In a comment piece for the Financial Times, Welteke said the Tobin tax, first proposed 30 years ago, is "again being extolled as (a) kind of cure-all" for problems linked to the apparent unfairness of the financial markets. "It is supposed to be about stemming speculative capital flows, these purportedly being the cause of financial and monetary crises." But "not all short-term transactions are harmful," he commented. "Currency trading, which tries to exploit price differentials, has an important role to play in terms of the functional viability of the markets. This arbitrage ensures uniform prices. A tax on currency trades would jeopardise its role and undermine market stability." A Tobin tax would also do nothing to suppress "the hallmarks of crises", namely "severe losses of confidence, highly volatile share prices and nosedives on the equity markets." Worse still, because "it is not possible to distinguish between the supposed evil of speculation and the benefits of external trade ... a tax on currency trading would affect all its forms and make international trading more expensive. "That would be a disadvantage in terms of the worldwide division of labour. The less developed countries would be the ones to suffer," he said. In terms of its implementation, "difficulties are likely to be encountered not only with regard to countries' political will, but also in terms of determining the instrument's ideal technical form." He added: "If we want to avoid crises, we must tackle them at their source: poor economic and financial policy, banking difficulties or unsound developments in the real economy. Speculative capital flows are merely the symptoms of suspected imbalances."