Markets not monsters, Deutsche boss tells Berlin

FRANKFURT, May 17 (Reuters) - The head of Germany's biggest bank warned Berlin not to vilify financiers after German President Horst Koehler likened financial markets to a "monster that must be tamed".

"Demonising financial innovation in general would damage our future economic growth and our welfare," Deutsche Bank (DBKGn.DE: Quote, Profile, Research, Stock Buzz) Chief Executive Josef Ackermann told the Frankfurter Allgemeine Sonntagszeitung in remarks to be published on Sunday.

"Only a small part of the financial system did not pass the market test" posed by the turmoil unleashed last year by rising default rates on risky U.S. mortgages.

In a newspaper interview this week, Koehler made the monster comment while criticising banks for taking on risky investments without adequate risk provision.

"We have to hold up a mirror to the finance world. They have deeply embarrassed themselves. And I still have not heard a clearly audible mea culpa," Koehler told Stern magazine.

Ackermann, who is Swiss, was not apologising.

"I do not feel addressed by this (comment). I already said last summer that the banks -- including us -- made mistakes," he said, but added the global financial system was never close to collapse and that the impact on the real economy was "bearable".

Koehler, a former junior German finance minister who was managing director of the International Monetary Fund from 2000-2004, called for stricter banking rules, setting aside more capital to cover financial investments, and using the IMF as a watchdog to monitor the international financial system.

Ackermann dismissed a broader role for the IMF, proposing instead a council of experts that could watch out for excessive moves and sound the alarm in time. (Reporting by Michael Shields) (michael.shields@thomsonreuters.com, Reuters Messaging: michael.shields.reuters.com@reuters.net; +49 69 7565 1266))