Confidence is the most important currency for strong financial markets. Our goal must then be to restore confidence in the financial system, the Chancellor declared – the confidence of citizens, businesses and the financial institutions themselves.
Crisis management and prospects
In view of the current turmoil in the financial sector, the Chancellor believes that more is needed than traditional crisis management. The second step must be to create genuine prospects for the future, she said. The German government is extremely active in both areas, she continued.
Photo: REGIERUNGonline/Bergmann
EU strategy - national actionWith the syndicated finance package put together for the Hypo Real Estate Bank, the German government and private banks have together warded off damage to the German banking system on a potentially inconceivable scale, Angela Merkel underscored. She stressed that the rescue package is in no way a hand-out to the bank. There will be strings attached.The Chancellor sees the decision to replace the executives of the ailing bank, taken the same day, as another confidence-building measure. She sees no need to tighten anti-mismanagement regulations. "In Germany we already have legal provisions for making managers liable for their mistakes,” she underscored. The existing provisions must only be better and more frequently applied.
Dovetailing national and international action
At international level too the German government is active. One good example is the meeting of the European G8 nations last weekend in Paris. It is important to dovetail national and European measures, said Angela Merkel.
The Chancellor does not believe that national safety-nets, such as the steps taken by the Irish government, are the right way to tackle the crisis. This will only lead to an undesirable distortion of competition within Europe. Equally, she rejected the idea of a joint European bail-out fund for troubled banks as the wrong path to take.
Instead, Angela Merkel advocated coordinating activities at international level while taking action at national level. She welcomed the decision of all EU member states to support credit institutions important for the respective national system if necessary. "All these measures are important for our economy – and for the people of our country.”
Photo: REGIERUNGonline/Bergmann
Genuine prospects neededAt the same time the Chancellor reminded her audience that Germany launched an initiative last year to promote transparency on international financial markets. The calls that emerged from the G8 summit in Heilgendamm for greater transparency on financial markets, better liquidity management, new regulating of rating agencies and bringing European accounting regulations into line with American regulations, remain part of the German government’s long-term strategy.Stability even at times of crisis – reforms pay off
"We need banking watchdog institutions that take a longer-term view,” declared the Chancellor. To this end, the German government is endeavouring to establish more efficient cooperation between the stock market watchdog authority BaFin and the German Bundesbank.
The Chancellor believes that the current crisis also offers us the opportunity to demonstrate that in a social market economy, liberty and order go hand in hand. This helps the economy to function smoothly and is in the interests of all citizens. "The social market economy is the best model,” Angela Merkel declared with conviction.
The long-term impacts of the crisis cannot yet be gauged, she continued. Germany is, however, stable, well equipped and fit to face global competition. The reform course adopted by the government over the last few years is paying dividends.
