US can no longer dominate the debate, says Sarkozy

Paris: France and Germany yesterday called for an overhaul of the financial system at an April summit and French President Nicolas Sarkzoy said the United States should no longer be allowed to dominate the debate.

They said new institutions were needed to prevent a repeat of the financial crisis and a fairer form of capitalism that would not lead to imbalances in wealth and the world economy.

"Once everything is going better, the financial markets will tell us, you don't need to get involved, you the politicians because everything is working again," German Chancellor Angela Merkel told a conference on the future of globalisation.

"I will stay firm, we must not repeat the mistakes of the past."

She said they should consider creating an economics council to work alongside the United Nations Security Council.

Sarkozy said he was not looking to destroy capitalism but to change the financial system that led to excessive risk and huge bonuses for some bankers.

"Enormous imbalances have appeared& Purely financial capitalism has perverted the logic of capitalism," he said.

Politicians have been divided about how to respond to the crisis but Merkel and Sarkozy presented a united front.

They will both attend a meeting of G20 leaders in Britain in April and said they hoped the summit would lead to swift action.

Sarkozy said the US, where President-elect Barack Obama will take office on January 20, should not be allowed to dominate the discussions.

"I have always been a supporter of a very close alliance with the United States but let's be clear, in the 21st century it is no longer a single nation who can say what we must do, what we must think," he said.

"We will not accept the status quo, we will not accept standing still, we will not accept a return to one single idea."

Both Merkel and Sarkozy singled out China and the United States as the main sources of imbalance in the world economy.

"We have a situation where China, has the biggest currencies reserves in the world. At the same time there is a very large deficit in the United States," Merkel said.

"That is something which a factor of instability over the long term."

Sarkozy said monetary policies and exchange rate management should be part of the discussion of the overhaul of the system.