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Merkel welcomes greater self-regulation by banks

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11:00 CEST+02:00
German Chancellor Angela Merkel welcomed on Sunday moves by banks towards greater self-regulation following the subprime credit crisis, saying people should have heeded Berlin's warnings last year.

Merkel said in a newspaper interview that as head of the G8 and holder of the European Union rotating presidency in 2007, Germany had "worked intensively" for greater transparency in the global financial system.

"Today I notice that the economy is learning from the financial crisis and is now taking on board our initiatives for self-regulation," Merkel told the Frankfurter Allgemeine Sonntagszeitung.

"What a year ago was dismissed as state intervention is now seen as necessary transparency measures for the financial industry."

Josef Ackermann, head of Deutsche Bank, the country's only heavyweight in international finance, last week conceded for the first time that the banking industry was in large part to blame for the current credit crisis.

Last year large numbers of US homeowners began defaulting on risky home loans that banks had repackaged as complex financial instruments. These have now blown large holes in banks' balance sheets, leading to what IMF head Dominique Strauss-Kahn this weekend called the worst crisis since the 1930s.

But banks have rejected calls for closer regulatory scrutiny, arguing that they have taken lessons from what has happened and that they are able to police themselves Merkel also said that there was no reason for Germany to fear an economic crisis.

"Thanks to the competitiveness of our companies the German economy is so robust that I see no reason to fear a crisis," the conservative chancellor, in power since 2005, said in the interview.

Her comments appear to be borne out by recent data showing that Europe's largest economy is holding up well despite a slowdown in the United States, higher commodity and energy prices and a strong euro.

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