Speaking to some 400 delegates gathered for the German Trade Union Federation (DGB) annual meeting in Berlin on Sunday, Chancellor Angela Merkel denounced speculation against the euro.

But she said the European Union could only overcome the problem by coming to terms with the big differences which exist between Europe's strongest and weakest economies.

"This calls for more regulation," Merkel said in a speech, trying to calm labor union concerns, "but unfortunately this speculation was, and is, only possible because there are considerable differences in economic strength and indebtedness between the member states of the euro."

The euro tumbled more than four percent against the dollar on Friday to an 18-month low of just over $1.23.

Buying time

Defending the trillion-dollar (€750 billion) stabilization package for the common European currency, agreed to by the eurozone economies and the International Monetary Fund last week, the chancellor still said that far more was needed.

"We have done no more than buy time for ourselves to clear up the differences in competitiveness and in budget deficits of individual eurozone countries," Merkel said. "If we simply ignore the problem we will not be able to calm this situation down," she stressed.

Merkel also called for more regulation of the highly speculative derivatives trade, short selling and hedge funds, but added that the excesses of the financial markets could not be combated if the United States did not regulate its own markets.

The chancellor told the Berlin meeting that a financial transaction tax proposed by German labor leaders had little chance of success unless it was adopted internationally.

US banks bear 'great responsibility'

Meanwhile, in an apparent effort to hold financiers accountable for the global economic crisis, Greek Prime Minister George Papandreou on Sunday raised the specter of taking legal action against US investment banks. Papandreou said they bore "great responsibility" for Greece's debt crisis.

In terms of culpability, however, the Greek government shares a healthy portion of the blame.

The Greek parliament is currently looking into deals the government made in 2000 with help from Goldman Sachs to allow them to mask the extent of Greece's debts using complex financial accounting practices.

gb/dpa/AFP/Reuters
Editor: Martin Kuebler