BERLIN (MNI) – German Finance Minister Wolfgang Schaeuble said
Thursday that the Greek crisis has shown the urgent need for financial
market reforms.

“There exists an enormous need for action,” Schaeuble said at a
conference on financial market regulation here.

The minister said some financial instruments needed a “critical
assessment.” Instruments like credit default swaps or short selling “can
massively increase economic volatility” also by inciting herd behaviour,
he said.

Schaeuble reckoned there was an “inherent trend to volatility” by
financial market players because they don’t make money on stable and
calm markets. Thereby, financial market actors were effectively
thwarting efforts by governments to smooth volatility and assure stable
economic growth, the minister claimed.

Chancellor Angela Merkel, speaking at the same conference, urged
the G20 nations to send a strong political signal for financial market
regulation at their next meeting in Canada.

Taxpayers won’t agree to shoulder the burden of a second or third
financial crisis, she warned. “This would bring extreme danger,” she
stressed.

The chancellor reaffirmed her pledge to lobby for an international
financial market tax at the G20 meeting, but acknowledged it would be an
uphill fight.

Commenting on the current euro crisis, Merkel said the Eurozone
member states had shown their political determination to undertake
action to defend the common currency.

She raised doubts about the judgement of the rating agencies on the
rescue package for Greece and called for the creation of a European
rating agency.

The decision of the ECB to purchase Greek government bonds was also
meant to be a signal that the central bank does not share the judgement
of rating agencies on the Greek stability plan, Merkel explained.

Still, she reaffirmed her call for budget consolidation and a
stiffening of the EU Stability and Growth Pact.

In that regard, the chancellor said she was “extremely worried”
about the possibility coordinating at the global level an exit from the
current stimulus measures. “We will insist on a consequent exit strategy
in Europe,” Merkel stressed.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

[TOPICS: MT$$$$,MGX$$$,M$X$$$,M$G$$$,MFX$$$,M$$CR$,M$$FX$]