Toulon, France - The economic turmoil provoked by crises in the American sub-prime and finance markets has put an end to the free- market economy, French President Nicolas Sarkozy said Thursday in the southern French city of Toulon.

"Laissez-faire is finished, the all-powerful market that is always right, that's finished," Sarkozy said in a widely anticipated speech, his first in France on the economic crisis.

As a result, it is "necessary to rebuild the entire global financial and monetary system from the bottom up, the way it was done at Bretton Woods after World War II," Sarkozy said.

In July 1944, an agreement was signed in Bretton Woods, New Hampshire, that established new rules for commercial and financial relations among the world's major industrial states.

Banks must be regulated, Sarkozy said, "to regulate the system.... The crisis must lead to a wide-ranging restructuring of the entire global banking system."

The French president also called on the European Union to begin a "reflection" on a new monetary policy, an indirect criticism of the anti-inflationary policy carried out by the European Central Bank.

"If (the EU) wants to have the means to emerge strengthened, not weakened, from the current crisis, it must carry out a collective reflection about its doctrine of competition,... on the instruments of its economic policies, on the aims of its monetary policy."

With France currently occupying the rotating presidency of the EU, Sarkozy said he would "propose initiatives" on these issues at the next EU summit, on October 15. (dpa)