Major nations have pledged 'all necessary steps' to boost sagging market confidence and to give a bigger voice to developing countries in the global economy.
The finance ministers and central bank governors of the world's biggest developed and emerging nations at the Group of 20 meeting in Sao Paulo said here was consensus for major reforms of a global international financial system ravaged by a credit crisis.
Although no specific proposals emerged, the G20 said in a statement: “We agreed that we must draw policy lessons from the current crisis and take all necessary steps to restore market confidence and stability and to minimize the risk of a future crisis.”
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The statement said officials at the meeting noted “that the global crisis requires global solutions and common set of principles,” and added that “we stand ready to urgently take forward work and actions agreed by our leaders.”
The G20 communique and statements from officials indicated a general agreement on broad principles among the ministers, noting that more detailed proposals would come from the November 15 summit of G20 heads of state and government hosted by US President George W. Bush.
Brazilian Finance Minister Guido Mantega said that at next week's Washington summit “we'll have the political power” of the heads of state and government “to proceed with proposals.”
The Brazilian minister, who has led a call for emerging nations to play a bigger role in financial affairs, said that officials saw a need for quick actions to steady a troubled global economy.
“The solutions have to come fast. We have to change the tires with the car in motion,” he said.
“In one or two or three months we will see the answers to these questions.”
But asked whether the G20 would replace the G7 as a steering committee for economic affairs, he said, “This is an issue that has not yet been resolved, but the G20 is a strong candidate to coordinate actions.”
The Sao Paulo meeting concluded that the Bretton Woods system set up to govern international finance in 1944 should be revamped. This would mean overhauls of the World Bank and International Monetary Fund, created at Bretton Woods.
“We underscored that the Bretton Woods Institutions must be comprehensively reformed so that they can more adequately reflect changing economic weights in the world economy and be more responsive to future challenges,” the statement said.
“Emerging and developing economies should have greater voice and representation in these institutions.”
The statement said the IMF, World Bank and other international financial institutions “have an important role to play, consistent with their mandates, in helping to stabilize and strengthen the international financial system, advancing international cooperation for development and assisting countries affected by the crisis.”
Stephen Timms, Britain's junior finance minister, noted that the G20 “has never been more relevant than it is today” and added that there was “broad agreement across the G20 on the need for change.
“We want urgent coordinated action to stabilize the situation,” he said.
French Finance Minister Christine Lagarde said “there was a convergence of views on the response” to the crisis.
The ministers spoke after a meeting of the officials from the G20 group of nations, which includes the G7 (Britain, Canada, France, Germany, Italy, Japan and the United States) plus many important emerging economies, including Brazil, India, China, Russia and Indonesia.
Opening the weekend session, Brazilian President Luiz Inacio Lula da Silva said that a “new world financial architecture” was needed to coordinate the response to a deepening crisis.
“This is a global crisis and it demands global solutions,” Lula said.
“The crisis gives an opportunity for real changes,” he said, adding: “We cannot, we must not and don't have the right to fail.”
European leaders have said they hope the Sao Paulo meeting will lay the groundwork for the start of key reforms to be put in motion starting with a November 15 summit.