CHANCELLOR MERKEL SPEAKS ON FINANCIAL REFORM - 'We Can No Longer Stand Passively By'

[FarCenter]

On the eve of the financial summit in Washington D.C., Chancellor Angela Merkel told a German newspaper that it is time for systemic reform. Warnings that the state should stay out of financial markets, she says, are unwelcome.

How radically is the world ready to change the global financial markets? That is the question many are asking on Friday as heads of state and government from the world's 20 leading economies head to Washington D.C. for this weekend's financial summit. And German Chancellor Angela Merkel, for her part, seems ready to push for far-reaching change.

In an interview published in the Süddeutsche Zeitung on Friday, Merkel said that she was expecting difficult negotiations -- talks, she said, which would last far beyond this weekend's meeting. But it was time, she told the paper, for greater oversight on the financial markets. "For a long time, we had a situation where very few understood the risks aside from those who wanted to earn money from (complicated new financial) products," Merkel said. "That won't happen again; that can't be allowed to happen again."

To make sure that it doesn't, Merkel is heading to the US armed with a sheaf of proposals and ideas developed for her by a team of Germany's leading economists, headed up by Otmar Issing, the former chief economist at the European Central Bank (ECB). She is expected to float the idea of creating a global risk map which will collate national data on large bank loans and investments as a tool to identify concentrated risk. The paper also argues for greater transparency when it comes to ratings agencies and for complex, structured financial products. International oversight, Merkel says, must be strengthened.

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http://www.spiegel.de/international/germany/0,1518,590455,00.html