G20 nations vow to boost growth, prevent new crisis

Leaders of the world's 20 largest economies pledged action Saturday to reverse a looming global recession and prevent future financial upheaval, but shied away from a coordinated stimulus plan.

The Group of 20 nations, which represent 85 percent of the world economy, issued a five-page communique and a six-point action plan that vowed to "take whatever further actions are necessary to stabilize the financial system."

"We are determined to enhance our cooperation and work together to restore global growth and achieve needed reforms in the world's financial systems," the G20 said after the crisis summit in Washington.

The G20 leaders tasked their finance ministers with drawing up a series of recommendations by March 31 to be brought before a new summit.

Six areas will be specifically targeted: regulating those parts of the financial markets which have exacerbated the crisis , boosting transparency and reforming "fat cat" compensation practices.

The ministers must also evaluate global accounting norms and the financing needs of international financial institutions.

Finally, they must draw up a list of financial institutions whose collapse would imperil the global financial system.

The G20 leaders will then meet again by the end of April, possibly in London as suggested by French President Nicolas Sarkozy, as Britain will then be the organization's chair.

That timeframe moves beyond President George W. Bush's term and into the administration of Democratic president-elect Barack Obama, who was not at the summit.

Bush, who hosted the summit, said the leaders had agreed that both the International Monetary Fund and World Bank should modernize its structures.

"We should reform the international financial institutions. Again, these institutions have been very important -- the World Bank, IMF -- but they were based on an economic order of 1944," he told a press conference.

"They ought to consider extending voting power and representation to developing nations. Particularly those who increased the contributions to the institutions."

And the US leader, who bid an emphatic "goodbye" at the end of his press conference, said he had told fellow leaders that the United States would enjoy a "seamless" transition to Obama's new team which takes office on January 20.

While the final communique did not set out specific ways of reforming the world's financial institutions, leaders said that goal was clearly high on the agenda.

"It is absolutely clear that we are trying to build new institutions for the future," British Prime Minister Gordon Brown told reporters.

"We are going to reform the IMF as we do so, the World Bank may also be reformed."

"I believe the summit went positively," agreed Russian President Dmitry Medvedev. "The countries which took part in it showed desire and commitment to overcome a crisis which has not yet reached its bottom."

The G20 countries said they would use "fiscal measures to stimulate domestic demand to rapid effect, as appropriate, while maintaining a policy framework conducive to fiscal sustainability."

But while pledging to work together on beefed-up regulation of murky investment tools such as credit default swaps, which lie at the heart of the current crisis, the summit said it was crucial not to go too far.

Reflecting Bush's demands, the G20 said it would strive for new regulation that is "efficient, does not stifle innovation, and encourages expanded trade in financial products and services."

And in line with US warnings against a return to protectionism, the summit grouping all of the major industrialized and emerging players pledged quickly to revive World Trade Organization talks.

Summit leaders also agreed that market regulation remained a national, not a global, responsibility, but that harmonization was needed to keep problems from spilling across borders.

The G20 nations, which include the major industrialized powers as well as emerging giants Brazil, China, India and Russia, have been locked in debate about what caused the crisis.

African leaders anxiously watching the outcome of the talks, urged their more powerful cousins not to forget their impoverished continent.

"The current crisis confirms the need to build a new financial architecture, involving not only emerging countries, but also Africa," said Mali's President Amadou Toumani Toure during a meeting in Strasbourg, northern France.

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