Merkel demands better global financial regulation

Merkel demands better global financial regulation
Photo: DPA
German Chancellor Angela Merkel on Wednesday called for tighter regulatory control on the international financial system following the recent turmoil on Wall Street.

“We are in desperate need of an improved regulatory framework,” Merkel said in a speech to parliament, saying only moderate progress had been made since Germany pressed for greater transparency as head of the G8 in 2007. “We cannot stand by and do nothing. Politicians must act,” she said.

She said that the much-criticized rating agencies that assess companies’ financial health should be subject to a code of conduct. Merkel also added her voice to those seeking to calm the public, saying that the effect on the German economy from the current crisis looked set to be “moderate,” but would not leave the country “completely unscathed.”

“The federal government is watching developments with the utmost attention,” she said.

But German state development bank KfW admitted on Wednesday it had mistakenly transferred €300 million ($427 million) to US investment bank Lehman Brothers just prior to its collapse.

“We are working to shed light very quickly on this technical fault,” Finance Ministry spokesman Torsten Albig said. The tranfser happened on Monday as the US investment bank was filing for bankruptcy protection.

A KfW spokesman told the Frankfurter Allgemeine Zeitung newspaper that there had been “an erroneous swap payment on Monday … the reasons for which are being examined internally.”