BERLIN—The man who will challenge Angela Merkel to lead Germany next year has accused her government of failing to address the underlying causes of Europe's debt woes.

Peer Steinbrueck, who was officially nominated by the center-left Social Democrats Monday as the party's top candidate, said Merkel's government was "fighting off the symptoms but not the causes" of the eurozone crisis.

Steinbrueck said Europe's financial sector must be thoroughly overhauled, calling for greater regulation of banks and hedge funds.

The 65-year-old served as Merkel's finance minister in a 2005-2009 coalition government, steering the country through the financial crisis following the demise of U.S. investment bank Lehman Brothers.

Steinbrueck emerged as the main opposition party's candidate on Friday after a monthslong guessing game. The parliamentary vote is expected next September.