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Merkel says crisis chance for tough financial rules

Published 12/30/2008, 06:00 PM
Updated 12/30/2008, 06:05 PM

BERLIN, Dec 31 (Reuters) - German Chancellor Angela Merkel said on Wednesday she would press for stronger international financial regulations, saying the global economic crisis created an opportunity for more controls and greater transparency.

In a speech for broadcast on New Year's Eve released in advance, Merkel said her government would raise spending on infrastructure and education to stimulate growth, but warned she would not be pushed into heavy stimulus spending.

"The world is learning its lessons from the financial crisis," said Merkel, adding that the "financial excesses" and irresponsible behaviour of some bankers and managers were to blame for the crisis.

"The world has lived beyond its means," she said.

Merkel, who has indirectly criticised the United States and Britain for thwarting earlier efforts to tighten controls and introduce more transparency, said she would press for international organisations to clamp down.

"The opportunity created by this crisis is for the introduction of international rules that are based on the principles of the 'social market economy'," she said, referring to the German economic model with its heavy state intervention.

"I'm not going to let up until we've achieved our goal of getting these rules in place," Merkel said.

"The state is the guardian of the economic and social order. Competition must have a sense of proportion and social responsibility. These are the principles of the social market economy. They're in force in Germany but that's not enough.

"These guiding principles must be followed worldwide."

Merkel, whose annual address will be broadcast on German television on New Year's Eve, said the government would expand roads and railways and improve communications and be looking to protect and create jobs.

Schools, training centres and universities would be the focus of new spending, Merkel said.

But she added that Germany, where the crisis has not hit as hard as elsewhere, would not be pushed into stimulus measures of the same scope as in some other countries.

"The government is acting with determination and completeness," said Merkel, in an apparent response to criticism at home and abroad that she has dithered. "But I'm not going to make any decisions based on who screams the loudest." (Writing by Erik Kirschbaum; Editing by Jon Boyle)

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