Germany's Merkel calls for tougher finance regulation

Angela Merkel: "We need to have cooperation... not saying, that's not my problem, I don't care about it"

German Chancellor Angela Merkel has stepped up calls for tougher regulation of banks and financial markets.

She said governments of leading nations must act together and show a "signal of strength" by tightening financial rules.

Mrs Merkel's comments come a day after she warned the euro was "in danger" without strong action.

Germany has also angered other EU nations by acting alone in banning a type of short-selling.

That action came as Mrs Merkel tried to secure parliamentary support for Germany's contribution to a European bail-out fund - a measure which has proved unpopular with taxpayers unwilling to fund the massive black holes in the finances of countries such as Greece.

Start Quote

Chancellor Merkel needs to make this a crisis about 'Who runs Europe - governments or the markets?'”

End Quote Stephanie Flanders BBC Economics editor

BBC economics editor Stephanie Flanders said the chancellor' s actions were an example of political expediency.

"It's about getting the special vehicle for supporting Eurozone governments through the German parliament," she said.

'Understanding'

At an international conference in Berlin, ahead of next month's G20 summit in Canada, Mrs Merkel set out key demands including:

  • Stricter regulation of international markets, which she said must be the "benchmark" within Europe
  • Levying a tax on financial institutions
  • EU governments to shows greater budget discipline. Nations who break rules on debt and deficit to face strict penalties including cuts in European funds and the withdrawal of voting rights
  • A co-ordinated approach to removing stimulus measures put in place to support economies
  • A new European credit rating agency.

She also called on all G20 countries to act together - even if they had not suffered problems in their own economy.

Start Quote

There's a time and a place for radical reform of financial markets ”

End Quote Robert Peston BBC business editor

"If we are to have a global order and global governance we need to have an understanding for each other," she said.

However, the BBC's Steve Rosenberg in Berlin said that the call for unified action appeared to conflict with Germany having acted unilaterally to ban certain financial transactions called naked short-selling.

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That move, meant to ease public anger at home, took Germany's European partners by surprise and sent global stock markets sharply lower on Wednesday.

'Solid and credible'

In a strongly worded speech to MPs debating Germany's contribution to the Greek bail-out, Mrs Merkel had said Europe faced "the biggest test in decades", with the euro "in danger".

However, on Thursday, France's economy minister said the euro was not at risk.

Christine Lagarde told RTL Radio: "The euro is a solid and credible currency. I absolutely do not think that the euro is in danger."

The euro has fallen to a four-year low against the dollar this week before strengthening. Thursday afternoon saw it falling again, down 0.7% to $1.234.

After sharp falls on Wednesday, global European stock markets continued their falls in Thursday trading, amid continued concerns over Europe's efforts to stem it debt crisis.

London's FTSE 100 index fell 2.5%, the French Cac 40 shed 3.8% and Germany's Dax 30 index lost 2.9%. Meanwhile on Wall Street, the Dow Jones was 2.5% lower.

Earlier, concerns about the prospect of a crisis in Europe denting demand for imports pushed Japan's Nikkei index to a three-month low.

On Friday, an economic task force set up by EU president Herman Van Rompuy will meet in Brussels.

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