UPDATE:Germany’s Merkel:Succeeded In Rescuing Banks In Crisis
BERLIN (Dow Jones)–German Chancellor Angela Merkel said Tuesday efforts to rescue the banking sector, hit hard by the financial crisis, have worked out.
“We fundamentally succeeded in rescuing banks,” Merkel said at a conference organized by the Initiative New Social Market Economy, or INSM.
However, she added that there still needs to be a “timely sensible” restructuring of the country’s state-owned Landesbanken.
“We are still working on this problem,” Merkel said. “The Landesbanken must restructure.”
The chancellor also said the Basel II rules, which govern the amount of capital banks need to hold against potential market losses, must be changed to avoid any negative impact on economic growth.
Merkel said she doesn’t expect domestic demand to replace exports as the main driver of Germany’s economy.
The chancellor also sharply criticized the recent liquidity policy of the U.S. Federal Reserve, calling for a return to what she called “sensibility.”
She said the independence of the European Central Bank “must be retained and things which other central banks are doing, must be reduced.”
“I regard with great skepticism whatever powers for example the Fed has and also the Bank of England,” Merkel said. “We must together return to an independent central bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years time.”
She added that an international financial market regulatory framework is needed.
-By Andrea Thomas, Dow Jones Newswires; +49-(0)30-2888-4126; andrea.thomas@dowjones.com
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