German Chancellor Angela Merkel said Thursday that she will push her Group of 20 counterparts to accelerate steps to tighten political control over financial markets and add new taxes on banks.
Merkel also said she will urge G-20 leaders to coordinate their strategies as they look to withdraw stimulus measures enacted during the financial crisis.
Merkel was speaking at a conference of finance ministers from a number of G-20 nations to discuss new financial regulations the group will consider at a June summit in Toronto.
"I am very concerned that we … agree on a similarly coordinated — as we did stimulus measures — international agreement on exit strategies," Merkel said.
She also pushed for a financial transaction tax on banks, or a financial activities tax, which would be applied to financial institutions' profits and bonus payments. These would come on top of the bank levy Germany plans to implement, German officials have said.
Germany's cabinet recently proposed an annual levy on banks' balance sheets, excluding customers' deposits, that could generate up to 1.2 billion euros ($1.5 billion) annually.
"We will lobby in Canada for the financial market to be taxed in addition to the levy," Merkel said, referring to next month's meeting.
Merkel also called on European leaders to create a European ratings agency as an alternative to the big private-sector agencies, which have been criticized for failing to detect the approaching credit crisis.
French Finance Minister Christine Lagarde, whose prerecorded remarks were played for attendees, also called for tougher regulation of rating agencies. "It's critically important that European coordination be organized to make rating agencies actually participate and not undermine the appropriate organizing of markets and valuation," Lagarde said.
German Finance Minister Wolfgang Schaeuble implored G-20 partners to head to Toronto willing to take concrete action.
"The summit in Canada is an opportunity, a challenge," he said. "But it's also a risk. There mustn't be any step backwards and not even a standstill compared [with the previous summit in] Pittsburgh. We must make progress."
Merkel also reiterated her criticism of financial markets that have driven down the value of the euro and have stressed those euro-zone governments with high debts, above all Greece.
"I only ask the financial sector to deal with us honestly," Merkel said. "The place for honest advisers is still vacant."
Germany's unilateral ban on so-called naked short sales of securities caught other European Union governments unawares, drawing an angry response from France even as financial markets fretted that other countries might follow suit after EU finance ministers meet Friday.
Lagarde did not address the ban explicitly, but said Germany and France were "absolutely in agreement" on their approach to reforming markets, and she lashed out at some derivatives "traded without transparency, in total obscurity and darkness, really."
Naked short selling involves the sale of an asset that is not owned by the seller and is not borrowed to cover the position while it is held. Some politicians have claimed the activity can be used to manipulate markets because the amount of naked short selling can dwarf sales of the underlying assets.
The German crackdown on certain short sales came ahead of Friday's important vote in the German parliament on Berlin's contribution to the EU aid package being created to protect euro-zone governments from defaulting on their debt.
Schaeuble rejected criticism from market players. "I am not unsettled by criticism from market participants saying these are insane measures," he said.