German Chancellor Angela Merkel on Thursday warned of bubble driven by improper regulations on financial institutions.

German Chancellor Angela Merkel speaks during the "Special Address -- Building Resilient Institutions" with Klaus Schwab (not shown in the picture), Founder and Executive Chairman of the World Economic Forum, in Davos, Switzerland, Jan. 24, 2013. Merkel on Thursday expressed concern about Japan's foreign exchange policy, after the Japanese central bank adopted an ultra-loose monetary policy.

Addressing business and political leaders at the World Economic Forum here, Merkel called on the financial industry for support in putting regulations on financial institutions in place.

She said that every financial instrument, every financial product and every financial market should be placed under regulations.

"We are very far from that," Merkel said.

She warned of another bubble or deep crisis for the global business and economy, saying that it "will become very very difficult to master."

If that happen, "people will then completely lose trust," she said.

According to Merkel, people will not allow the policy makers and the industry to make the same mistakes again. "They will not forgive us for making such mistake again."

Source: Xinhuanet