Nicolas Sarkozy has called on G7 governments to work with the International Monetary Fund and central banks on financial transparency following a week of turbulence on world markets over US mortgage sector problems.
The French president said he thought it "essential that as heads of state we should draw the consequences and lessons of the events that are affecting the markets."
"It seems essential to me that we monitor the transparency of the markets' operations and their ability to finance the world economy in a stable and effective way," he said according to AP news agency.
The comments were made in a letter to German chancellor Angela Merkel, current head of the G8 group of industrialised nations which also includes the G7.
The letter calls on G7 finance ministers to draw up a set of proposals on greater transparency to be discussed at their next meeting in October.
The proposal is likely to be a boost to Germany's aims—it is currently G8 president—to get greater transparency over hedge funds by getting a code of conduct established for them—a push that failed during the last G8 meeting in June.
The scrutiny is set to increase elsewhere too. The European Commission on Thursday (16 August) said it was looking into whether rating agencies had done enough to alert investors about the possible dangers of the US sub-prime mortgage sector.
Subprime loans are loans given to people with a poor credit history. It was the recent sharp increase in defaults on repayments on these loans that prompted the market panic and credit crunch over the last week.
The European Central Bank over the past days pumped over ¬200 billion into the markets to fend off a credit crunch. Other central banks around the world also made cash injections.
Brussels' investigation, to be headed by internal market commissioner Charlie McCreevy, is to look into how ratings agencies are financed and whether there is any possible conflict of interest.
At the moment, ratings agencies are paid by the concerns that they are rating, a system that Mr McCreevy and his officials are taking a close look at.
The commission is to examine "concerns we have to their slowness with regard to market deterioration since mid-2006," said a spokeswoman on Thursday, with reference to the fact that it has been known since last year that there were problems with the US mortgage sector.
However, the commission is unlikely to take any action before April next year, said the spokeswoman, when the Committee of European Securities Regulators is due to produce a separate report looking at how the ratings agencies are run.