FRANKFURT (Thomson Financial) - German Chancellor Angela Merkel, reacting to the turmoil in the financial markets as a result of US subprime mortgage woes, said there has to be more transparency in the financial markets, particularly on hedge funds, while rating agencies should be examined on their methods for valuing a company.
In an interview with Bild am Sonntag newspaper, Merkel said that as an example, information such as the hedge funds' source of capital and the extent of their credit risks should be available.
'We are dealing often with a chain of commercialization of credit risks, which are no longer transparent but for which everybody is liable in the end,' she said.
'And the influential rating agencies should be examined. In the future, it has to be clear what they use as the basis of their ratings of companies. It cannot be a black box and out of it something pops up which no one understands,' she said.
She said the German government will continue to demand for more transparency in the financial markets, and noted that developments in the past weeks prove how urgently the issue has to be pursued.
'It is unsatisfactory that one needs to have a lengthy period of time until one can agree on corresponding measures on an international level,' she said, referring to the German government proposals for tighter regulation of hedge funds.
She said that when Germany had the rotating presidency of the G8 group of industrial countries in the first half this year, it had put on its agenda the issue on transparency of hedge funds. marilyn.gerlach@thomson.com mog/hjp COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.