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Sarkozy and Merkel call for tougher rules

City A.M. Reporter
FRANCE and Germany renewed their calls for tougher regulation of the global financial sector yesterday, ahead of the G20 meeting in Canada later this week.

“Since our first meeting in Washington in 2008, we have made solid progress in implementing the financial regulatory reform agenda,” French President Nicolas Sarkozy and German Chancellor Angela Merkel said in a joint letter to Canada’s Prime Minister Stephen Harper.

“However, our work is not yet finished. Recent financial turbulences have shown that more needs to be done to ensure financial stability.”

Sarkozy and Merkel called for an international agreement to introduce a levy or tax on financial institutions and for an international accord on a financial transaction tax.

“Such a levy or tax should be part of a credible resolution framework... we believe this levy should be risk-adjusted and address the issue of moral hazard with respect to systemically important institutions.”

Economist Otmar Issing, who counsels Merkel on financial regulation, said he was advising her that a bank charge should be levied to allow banks to build up a risk buffer.