WOLFGANG SCHÄUBLE, Germany’s finance minister, has warned that the financial markets are “out of control” and called for “effective regulation” to ensure a properly functioning market.
Mr Schäuble said markets would not work properly “if the risks and rewards are completely unbalanced”. He called for the standardisation of products, regulation of over-the-counter transactions, and measures to improve transparency “for all market participants”.
“A market does not function properly if the risks and rewards are completely unbalanced,” he says. “We need transparency. Given the complexity of modern technology, the individual needs a chance to judge what he is doing. That’s why we need standardisation of products. And we need transparency for all market participants.”
He also threw his weight behind new calls for a global financial transaction tax, arguing that it should be discussed “in an unbiased way” at the June summit of the G20 economies in Canada. If it was not agreed, the European Union should consider going ahead on its own, he said.
Mr Schäuble’s support for a financial transaction tax follows growing pressure for further measures to force banks to share the costs of the crisis.
The German government faces a stormy debate in parliament this week over its participation in the €750 billion stabilisation plan for the euro zone.
Berlin has promised to give credit guarantees up to € 150 billion as part of the stabilisation package, if weaker euro-zone economies come under renewed pressure in the capital markets. The finance minister rejected domestic criticism of the rescue, saying it was essential to preserve the stability of the euro.
“The member states of the euro zone are all determined to defend the common currency,” he said. “If they are determined, then it will remain a stable currency.” – (Copyright The Financial Times Limited 2010)
