G20 leaders promise action on economic crisis

Prime Minister Stephen Harper (right) chats with his Finance Minister Jim Flaherty as Britain's Prime Minister Gordon Brown chats with aids prior to Saturday's start of the G-20 summit on the world economy in Washington.(Tom Hanson/Canadian Press)

Leaders of the world's most powerful countries have agreed on broad goals to combat the global economic crisis and prevent a similar meltdown in the future, but are leaving many of the details to be hammered out next year.

At the close of their summit in Washington, D.C., Saturday, leaders of the Group of 20 endorsed new safeguards for the global financial system, including measures to flag risky investment patterns and regulatory holes before they bite into the economy.

"We must lay the foundation for reform to help ensure that a global crisis, such as this one, does not happen again," the leaders said in a statement issued after the emergency meeting.

The 47-point plan calls for the creation of "supervisory colleges," where financial regulators can compare market notes across countries, better co-operation between nations on regulations, the eventual standardization of accounting rules governing how companies can value assets, and new attention to credit-rating agencies.

Most of the aims, however, were wrapped in financial jargon and will require more strategy to translate into action. It will now be up to Group of 20 finance ministers to flesh out the details to put such changes in place before their next summit on April 30.

"There is more work to be done," said U.S. President George W. Bush, who will have handed over the reins to President-elect Barack Obama by the time leaders reconvene in the spring.

He added that Saturday's summit on financial markets and the world economy "is not going to solve the world's problems," but provides solid guidance for future action.

Financial Stability Forum Chairman Mario Draghi of Italy, center left, and IMF managing director Domique Strauss-Khan, center right, toast at the welcoming the G20 world leaders to Washington Friday night. (Lawrence Jackson/Associated Press)

Prime Minister Stephen Harper said Canada supports the plan. He also reiterated his view that better regulations, not more of them, are the best way to restore growth and avoid protectionism.

"Canada's message is that good [financial] regulation begins at home, and that message was heard," he told reporters at the Canadian Embassy in Washington.

"Proper management has to be supported by concrete actions where the financial sectors can be assessed internationally by independent experts, and this is part of the statement. This is crucial in a world economy that is interconnected," Harper said.

Canada had been keen to advance one proposal in particular at the summit this weekend: an international "peer review" of every G20 country's national financial regulations.

Harper said Saturday that Canada had sought an agreement to submit countries' financial sectors to independent international assessment — and they have that agreement.

Up for debate Saturday was whether participating countries should promise to enact government spending plans to stimulate their economies, an approach favoured by some European nations. While G20 leaders expressed support for the idea in theory, they avoided a commitment to take such actions at the same time.

Harper said that "despite the great diversity of countries in the room for those two days of the summit, there was a practically unanimous agreement on all major topics."

Hundreds attended a protest against the meeting in the U.S. capital, some carrying bright yellow signs that read: "Money for people's needs, not bankers' greed." Similar demonstrations were held in Indonesia and the Philippines.

Protesters raise their clenched fists while carrying large cutout image of leaders of countries attending the Group of 20 Summit during a rally Saturday in Manila.(Pat Roque/Associated Press)

The Group of 20 represents about 85 per cent of the world's economy and two-thirds of its population. It's comprised of Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United States and the European Union.

Officials from the World Bank and the International Monetary Fund also participated in Saturday's discussions, which included agreement on expanding the financial police work of the IMF and modernizing the 63-year-old institution so it can remain relevant in a dynamic global economy.

Summit participants also supported drawing more countries, beyond the traditional vanguard of elite nations, into future summit discussions.

"Emerging market countries were not the cause of this crisis, but they are amongst its worst affected victims," declared Indian Prime Minister Manmohan Singh.

A goal of the meeting was to boost efforts to help such struggling nations withstand the financial crisis, largely caused by their bigger, more developed counterparts.

Although no fingers were pointed during the summit, the economic crisis is believed by some to have originated in the U.S., thanks to the extension of easy credit, outsized rewards for high-risk investing and insufficient oversight.

Japan's prime minister, Taro Aso, urged China and others to contribute to the IMF's $250 billion US bailout pool, aimed mostly at poorer countries.

On Friday, Aso said Japan was ready to lend as much as $100 billion US to the International Monetary Fund to support nations reeling from the global financial crisis.

With files from the Canadian and Associated Press