German Chancellor Angela Merkel is determined to launch a campaign to drastically change the rules of the financial market of the country with a huge rescue plan of nearly 500 billion euros (about 685 billion U.S. dollars).
Merkel announced the plan at a time when the German banking industry has become virtually inoperative and the stock market saw fateful price spiral downward.
Just as Merkel had put it, the German economy is facing its "most serious challenge" since the big crisis in the 1920s, and "therefore, the government must respond."
Merkel's strategy is not only to save the crisis-stricken German banks by injecting funds and offering governmental guarantees, but also to step up regulation in the whole financial industry.
This showed the government's determination to save the financial market by strengthening management to address the root causes of the crisis.
"We are taking a drastic action, no question about it ... so that what we have experienced is not repeated," Merkel told reporters.
Merkel's cabinet has drafted a set of new rules governing the financial industry, or the "new financial market constitution" as Merkel herself put it.
The chancellor ordered immediate actions to set up a special expert group to elaborate and review the rules governing the financial system.
She also brought the idea to Brussels on Wednesday when she attended the EU summit, seeking the EU-wide support for the reform of international financial rules, including the reform of the International Monetary Fund.
The new rules focused on two aspects -- to boost the "transparency" of the operation of banks and other financial institutions, and to strengthen control over the governing members of financial institutions.
German Finance Minister Peer Steinbrueck said that the new rules intend to cap the annual income of bankers below 500,000 euros (around 685,000 dollars).
The public have been complaining about high wages of bankers after the German government announced the rescue plan, and they also doubted that failing banks would be saved at taxpayers' expense.
During her public presentations, Merkel has always stressed more regulations on the financial system. "This is to protect citizens, not to protect banks' interests," Merkel explained.
There are good chances for the package plan to be passed at the two houses of parliament by Friday, as the chancellor's right-left "grand coalition" has a large majority in the lower house and also is strong in the upper house.
Nevertheless, due to the severity of the financial crisis, Germany's leading economic research institutes warned that the nation was on the brink of a recession, and they slashed their 2009 economic growth forecasts for the country from 1.4 percent to a mere 0.2 percent.
(Xinhua News Agency October 16, 2008)
