financial crisis
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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SNAPSHOT – Financial Crisis – 1330 GMT
Financial crisis
- New U.S. housing starts unexpectedly rebounded in February, surging 22.2 percent, according to data that provided a rare dose of good news for the recession-hit economy.
- Germany’s economy offered unexpected signs of optimism. A monthly poll by the ZEW economic institute in Europe’s biggest economy showed analyst and investor sentiment rising to -3.5 in March from -5.8 in February
- U.S. Fed seen holding rates, avoiding dramatic moves
- BOJ Governor Masaaki Shirakawa says a new $10.2 billion loan programme to help banks is aimed at those facing big risks from falling stock prices.
- U.S. Treasury plans to modify AIG (AIG.N) aid to recoup bonuses
- Ireland facing difficult recession which is worse than in the rest of the world, but its membership of the euro zone will help to mitigate the downturn – Finance Minister Brian Lenihan.
- Royal Dutch Shell says market conditions remain uncertain.
- Nokia to slash 1,700 jobs globally over the coming few months because of falling demand.
MARKETS
- World stocks pare early losses after Germany’s ZEW survey suggested economic sentiment was more resilient than thought but a fall in oil kept selling pressure strong.
- U.S. light crude slips nearly 1 percent to below $47 a barrel while spot gold tumbles to around $917 per ounce from $922.55 in New York on Monday.
- A surprise rebound in new U.S. housing drove the dollar higher against its global peers
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