European bank pushes for tighter regulation

14 November 2008

FRANKFURT – The European Central Bank (ECB) pushed Thursday for tougher regulation of financial markets and closer links among central banks as solutions for the global financial crisis.

Lucas Papademos, the ECB deputy president, told a conference, "The worst financial crisis in decades has made clear that coordination between central banks and regulators is necessary."

He was speaking at a meeting in Frankfurt of European central bankers on the lessons and challenges posed by the euro.

The conference marks the 10th anniversary of the launch of the currency in 1998. The euro zone nations continue to have central banks of their own to distribute currency.

The chairman of the US Federal Reserve, Ben Bernanke, and ECB President Jean-Claude Trichet were to take the podium together on Friday, the second and last day of the meeting.

Papademos said global coordination was needed both to manage crises and prevent new ones.

Economists said the current crisis, which was triggered by excessive lending to people who could not afford loans, particularly poorer US home buyers, was largely the result of insufficient regulation.

The troubles, which grew since summer 2007, showed that "financial markets did not hear the earlier warnings or did not want to", Papademos said.

[DPA / Expatica]