French president Nicolas Sarkozy has said he backs US President Barack Obama's plan to restrict the size and operation of US banks. He also told the World Economic Forum in Davos that globalisation had 'skidded out of control' in the financial crisis.
'President Obama is right when he says that banks must be dissuaded from engaging in proprietary speculation or financing speculative funds,' the French president said.
He said the financial turmoil was a crisis of globalisation. 'From the moment we accepted the idea that the market was always right and that no other opposing factors need be taken into account, globalisation skidded out of control,' President Sarkozy declared.
Also at the forum, financier George Soros blasted bankers for resisting reforms and joined growing calls for China to let its currency appreciate.
Soros also warned that political resistance to new state borrowing to keep economies moving risked causing a double-dip recession in 2011.
The man who made billions from currency speculation devoted much of his annual talk with journalists in Davos to efforts to contain banks after the financial crisis.
According to the head of the Soros Investment Fund, the crisis was triggered by a 'super-bubble' - a culmination of smaller bubbles that had built up over 25 years resulting from easy credit and which had never been tackled.
But he said President Barack Obama's plan to break up big US banks and impose special taxes on them was premature as banks were not out of the woods yet. 'I am very supportive of it but I don't think it goes far enough,' Soros said.
'The banking community that is opposing it is tone deaf and is making a big mistake in opposing it,' he added.
Soros said a new global regulation of the international financial system was needed, and possibly a new Bretton Woods - the accord made after World War II which set up the current international system including the International Monetary Fund.
Soros also urged China to let its currency strengthen, insisting it would be good for China and the rest of the world. He also said a new recession was possible because of political reluctance to take on extra government debt to keep economies moving.
The comments from Sarkozy and Soros came after surveys produced for the forum showed that world business leaders are worried that a crackdown on the financial industry could hit a fragile recovery from the worst recession since the 1930s.
The surveys showed global economic confidence on the rise after deep gloom in 2009 and a cautious return to hiring, especially in emerging markets. But the spectre of heavy-handed regulation and government intervention in the economy was the biggest cloud on many business leaders' horizon.
