WASHINGTON (Reuters) -- World leaders pledged rapid action on November 16 to rescue a weakening global economy from the worst financial crisis in over 70 years and agreed to give emerging nations more say in running financial affairs.
The Group of 20 (G20) leaders from major industrialized and developing countries set out plans to toughen oversight for major global banks, study limits on banker pay and try for a breakthrough by year end in global trade talks -- all part of a roadmap to rebuild a financial system crippled by the credit crisis.
"We must lay the foundation for reform to help ensure that a global crisis such as this one does not happen again," they said in a statement after their first-ever summit.
They vowed to make progress before a second summit by the end of April.
U.S. President George W. Bush called the meeting, probably his last major economic event before he steps down in January, a success, saying leaders agreed to free-market, pro-growth policies.
"It makes sense to come out of here with a firm action plan, which we have. And it also makes sense to say to people that there is more work to be done," he said.
The G20 also called for fiscal stimulus measures, be they tax cuts or government spending, to take "rapid effect," and urged more interest rate cuts.
But they fell short of announcing any new measures or major regulatory breakthroughs, and left it up to individual countries over what actions to take.
G20 support though could bolster efforts in the U.S. Congress to push through a second economic stimulus plan, which is opposed by Bush and backed by his successor. Britain, also heading fast into recession, may unveil tax cuts this month.
G20 warnings on the dangers of inaction were stark.
"Economic momentum is slowing substantially in major economies," it said.
Emerging countries are starting to get sucked into the maelstrom, as shown by Pakistan getting a $7.6 billion loan from the International Monetary Fund that same day.
"It is the worst crisis in 100 years," Japan Prime Minister Taro Aso. "But the crisis could be a chance at the same time. History tells us that when we overcome crisis, a new order is created. We should not be just flustered by the crisis."
Power Shift Begins
In what portends a major shift in the global balance of economic power, the G20 agreed to a place for emerging market economies on the Financial Stability Forum, where top bank regulators evaluate banking and market risk.
The FSF also won a bigger role in setting global financial policies and standards, which national regulators then would follow.
In the medium term, the G20 also opened the door to the big prize -- more seats for developing countries at the IMF and World Bank.
The West is relying increasingly on their money to bail out banks and countries. British Prime Minister Gordon Brown has lobbied export colossus China and oil-rich Saudi Arabia for help and had led the call for overhauling the 60-year-old Bretton Woods order that set up the IMF and World Bank.
Saudi Finance Minister Ibrahim al-Assaf told Reuters, however, the rich oil-producing kingdom had no plans to offer more money to the IMF. "There were lots of rumors that we were coming here to pay the bill; there is no such thing," he said.
Japan said it hopes China will throw money into the coffers of the IMF which acts as the world's financial policeman but until now has been dominated by the United States and the other members of the Group of Seven rich nations.
The leaders set their finance ministers an aggressive work schedule -- a review of global accounting standards, colleges of supervisors for major global banks, new standards for credit rating agencies and ways to limit bankers' pay by tying it to a company's risk profile. But much of the list already is being worked on. "It's remarkably bland," said Edwin Truman, analyst at the Peterson Institute for International Economics.
Hedge funds and private equity firms got an apparent exemption from tough new controls, with the G20 saying they should use voluntary best practices though at a faster pace.
Advisers designated by U.S. President-elect Barack Obama to meet with dignitaries on the sidelines of the G20 summit said he supports a coordinated response to the global financial crisis and is ready to work with member countries on improving the financial system when he takes office.
"The president-elect believes that the G20 summit of leaders from the world's largest economies is an important opportunity to seek a coordinated response to the global financial crisis," former Secretary of State Madeleine Albright and former Congressman Jim Leach said in a statement.