Global Economy Talks Call for Greater Role for Imf

Asian and European leaders today called for more international regulation and a stronger role for the International Monetary Fund in response to the worst financial crisis since the 1930s.

The call for changes to the international financial system came at the end of a two-day summit of 43 Asian and European leaders in Beijing, discussing what began as a crisis in the US housing market that went on to infect the global economy.

Echoing the call from Beijing, the US president, George Bush, said that agreement on principles for reform would be essential in preventing another disaster.

Bush, who will host a global summit on the financial crisis next month, said in his weekly radio address: "In recent weeks, concerns about the availability of credit, the safety of financial assets, and the volatility of the stock market have made many families understandably anxious about their economic future."

Governments have pledged around $4 trillion to support banks and restart money markets to try to avert a global recession that will hit developing countries hardest.

The UN secretary-general, Ban Ki-moon, yesterday warned that the crisis could strike a "final blow" to some poor countries.

"It threatens to undermine all our achievements and all our progress," Ban told a UN meeting.

"Our progress in eradicating poverty and disease. Our efforts to fight climate change and promote development. To ensure that people have enough to eat. It could be the final blow that many of the poorest of the world's poor simply cannot survive."

Emerging economies have been particularly hard hit by the crisis, forcing many to dip into their foreign exchange reserves to defend their currencies and financial systems.

The IMF is in negotiation with several countries to provide emergency loans and the list of countries asking for help is growing quickly. Pakistan has had to go cap in hand to the IMF, but supposedly strong economies in the developing world such as Brazil, Turkey and South Africa have also had to turn to the IMF.

Officials in Washington said those economies that qualify for a proposed new liquidity fund from the IMF could be eligible for an unusually high level of financing. Although the details of the package were not finalized, the plan,, which may offer countries up to five times their IMF quota, could be approved as soon as next week.

It would allow certain emerging market economies to exchange local currencies for US dollars to ease short-term credit strains.

Iceland, where the financial system has all but collapsed, yesterday called on the IMF for $2bn (£1.25bn) to help fix its banking system, restart currency trading and soften the blow from the global downturn.

Wen Jiabao, the Chinese prime minister, said that governments must do whatever is needed, and without delay, to limit damage to the global economy from the financial turmoil. Wen signaled that China would back France's drive for tougher global financial rules at next month's summit in Washington.

President Nicolas Sarkozy of France, which currently holds the rotating EU presidency, said he expected concrete decisions to come out of the Washington talks, which had to address the underlying causes of the crisis, not just their effects.

"We have all understood that it will not be possible to simply meet and have a discussion. We need to turn it into a decision-making forum," he said in Beijing. "It is simply impossible to talk about taxes and the financial crisis without talking about currencies and the way they interact. All of this is of course going to be discussed."

Sarkozy has told China that he fears the US would be content if the summit produced "principles and generalities", according to a French presidential official.

Wen said the right balance had to be struck between regulation and innovation, but added: "We need financial innovation, but we need financial oversight even more."

In his remarks, Bush warned against taking a protectionist turn in response to the current financial turbulence, saying free markets and free trade were fundamental to long-term economic growth.

"These policies have shown themselves time and time again to be the surest path to creating jobs, increasing commerce, and fostering progress," Bush said. "And this moment of global economic uncertainty would be precisely the wrong time to reject such proven methods for creating prosperity and hope."