Dealing with crisis
January 31, 2010
"We don't want a situation where banks get a risk-free assurance from nation states," the minister, Rainer Bruederle, said.
Deutsche Bank CEO Josef Ackermann had previously proposed the fund as a way to help solve what he called the "too-big-to-fail problem" of a destabilized German and European banking sector.
"Of course, the capital for this fund would have to come from banks to a large degree," Ackermann said in an interview with the Financial Times.
The introduction of new fiscal regulations was a key subject of the annual meeting in the Swiss mountains. Officials have expressed concern that, without tightening the reigns on risk-taking, mistakes made prior to the financial crisis of 2007 could be repeated, at a time when monetary tools were nearly exhausted.
Reform troubles
On Wednesday, French President Nicolas Sarkozy delivered a keynote address in which he backed a recent call by US President Barack Obama to clamp down on the global financial sector.
"President Obama is right when he says that banks must be dissuaded from engaging in proprietary speculation or financing speculative funds," Sarkozy said.
Ackermann was one of many leading bankers at Davos who reacted fiercely to the calls to impose stricter, internationally-coordinated regulations on the world's banks.
"We don't feel it's a very good idea to make new suggestions - or new laws - at a time when the banking sector is as destabilized as it is," Ackermann said. "This will hinder the process of regenerating confidence on the global level."
Concerns of protectionism
Meanwhile, Bruederle warned that any new bank rules should be coordinated by the Group of Twenty (G20) largest industrialized and developing nations, to avoid one country having less restrictive rules than others and thus having a competitive edge.
"Due to competition between financial centers, we should avoid implementing reforms in an isolated way on a national or European basis," the German minister said.
The mantra of renewing the market-economy was repeated by numerous participants, even if exact, concrete measures were not presented, at a forum which is known for inclining more towards ideas and theoretical ideals rather than decision making.
Whether or not a global framework for regulation could be reached remained an open question, with few clues as to what would happen otherwise.
"We must have global rules to treat global issues," said Jean-Claude Trichet, head of the European Central Bank. "This is absolutely essential. If not, it's a recipe for catastrophe."
The chief of the International Monetary Fund, Dominique Strauss-Kahn, concurred, saying "my fear is that we may forget the key lesson from this crisis: coordination. We are not exactly going in that direction."
South Korean President Lee Myung-Bak, whose country chairs the G20 this year, pledged to pursue further reforms at the group's economic summit in November.
glb/AFP/dpa
Editor: Toma Tasovac