Saturday 25 January 2020

Merkel makes case to markets amid short-selling ban isolation

Tony Czuczka and Rainer Buergin

Chancellor Angela Merkel reached out to financial markets ahead of tomorrow’s vote on Germany’s share of a €750bn bailout, saying she needs "honest" advice as she presses for tougher global regulation.

Merkel, giving the opening address at a Berlin conference on financial rules one day after enacting a unilateral ban on some naked short-selling, said that she has to balance voter concerns with investors’ “understandable” desire for profit.

While she said she’s committed to holding the 16-nation euro area together, politicians are “no financial experts.”

“People are asking, ‘What powers do you politicians still have?’” Merkel said.

The Group of 20 nations agreed every product, every actor and every financial center must in future be regulated, she said.

“That’s what we promised the people. Now, one-and-a-half or two years later, people are asking what happened. At some point we have to deliver.”

Merkel’s speech contrasts with her previous condemnation of “destructive” markets and is her first attempt to explain the reasoning behind her decision to curb government-bond trading.

The ban left her isolated as she pushes for a crackdown on euro-area states that flout budget-deficit rules and seeks lawmakers’ backing for Germany’s share of as much as €148bn to backstop the euro.

“Governments are under pressure,” Thomas Mirow, president of the European Bank for Reconstruction and Development, told reporters at the conference.

“Citizens in the various countries expect their governments to act. The danger is that everybody does what they attach most importance to and there is not enough European and international coordination.”


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