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German Chancellor Angela Merkel has cranked up calls for tougher regulation on banks and
financial markets and has appealed to governments to act together to send a message of strength
by tightening financial rules.
Speaking in Berlin she said: “Will Germany and the whole euro zone ever
be able to act in a way that can guarantee sustainable growth without the necessity to
pay for the growth by high debt.”
Her comments were backed by the German finance minister Wolfgang Sch?uble:
“The main problem is that the financial markets with their innovative products and
the enormous effect on debt, with tools like credit insurances or naked short selling they
are able to exaggerate the market swings.”
The tough talking sets the stage for a bun fight at the G20 in Toronto in June with Merkel
looking for agreement on regulatory reform.
French analyst Natalie Pelras takes a different view:
“For the moment we’re not yet at the stage where the fear of intervention by states lowers
the markets, it is the fear of the economic situation of those states which hurts the
market.”
The economic task force set up by EU President Herman van Rompuy is due to meet in Brussels
on Friday.