The German government and a group of experts have together analysed what has already been achieved towards creating a new financial market architecture, and identified the steps that must still be taken.

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Chancellor Angela Merkel

(© BPA; by Steffen Kugler )

After the International Summits on Financial Markets and the World Economy in November 2008 and April this year, the governments of the G-20 states are now working their way through the resolutions adopted. "Our aim remains the same,” declared Chancellor Angela Merkel unequivocally after a meeting with the Expert Group New Financial Architecture, and added, "every product, every actor on the market and every location must be regulated.”
 
Another central theme of the G-20 summit on Thursday and Friday this week will be the power of banks, reported the Chancellor. Individual institutes must never again be able to exert pressure on governments if they are threatened by bankruptcy. Along with its European partners, Germany would like to see stricter regulations covering banks’ own reserves to prevent this scenario in future.
 
Should it nevertheless prove necessary to provide a credit institute with financial support, the burden must be shared, demanded the Chancellor. Merkel would like to see this and guidelines governing performance-related remuneration for executives (bonus payments) anchored in an internationally binding charter for sustainable economic activity.

Steinbrück demands that all nations pull together

Federal Finance Minister Peer Steinbrück advocated that the principle, "No product, no institute and no financial location without effective regulation,” be put into practice as swiftly as possible. The next step should be to draw up a concrete time schedule, he said.
 
A financial transaction tax, of the sort that Germany will be proposing in Pittsburgh, can only work, though, if all major players follow suit. A lot of doubters still have to be convinced that this is the right way forward.
 
A lot of questions also remain unanswered with respect to the risk map proposed by Professor Issing and his group of experts. The information received relating to risks around the world is extremely sparse, reported Professor Issing.
 
"We are on the right path,” declared the Chancellor, summing up developments since the first G-20 Summit on Financial Markets and the World Economy last November. It is, however, plain that some financial locations are once again more skeptical of the efforts to introduce tighter controls and regulation than they were at the start of the year.
 
"We must not let up in our untiring efforts to prevent any repetition of a crisis of this sort,” underscored the Chancellor. She has great expectations of the Pittsburgh Summit, as she announced over the weekend in her weekly video podcast.
 
The Expert Group "New Financial Architecture” chaired by Dr Otmar Issing, Professor of Economics, is mandated to elaborate proposals for the reorganization of financial markets. As part of their remit, they are looking at possible German contributions to financial market regulation.