Angela Merkel, the German Chancellor, will urge Prince Albert of Monaco to boost transparency at his state's secretive financial institutions when he visits Berlin next week.

Liechtenstein came under fire in Germany after prosecutors announced last week that they were investigating hundreds of people suspected of dodging German taxes by parking money in secret bank accounts in the principality.

German officials have pointed out that Monaco and Andorra are also on the Organisation for Economic Co-operation and Development's (OECD) blacklist of unco-operative tax havens. Thomas Steg, a German government spokesman, said: “The Chancellor ... will make clear that we also expect Monaco to co-operate and to accept the OECD standards on transparency, information exchange and fair behaviour in taxing.”

Ms Merkel's Government has said that it prefers European and international mechanisms to curb money laundering, fraud and unfair tax competition. Peer Steinbrück, the Finance Minister, said Germany might consider bilateral measures. “You could imagine, for example, that all transactions might be subject to an obligation to report,” he said. Money transferred to Liechtenstein could also be taxed at source, he said.

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