US PRESIDENT George Bush has announced that he will host a summit of world leaders soon after the US presidential election to address the global financial crisis.
Mr Bush made the announcement at Camp David before weekend talks on the crisis with French president Nicolas Sarkozy in his role as president of the European Council and European Commission president José Manuel Barroso.
"Both developed and developing nations will be represented. And together, we will work to strengthen and modernise our nations' financial systems - so we can help ensure that this crisis doesn't happen again," Mr Bush said.
"As we make the regulatory and institutional changes necessary to avoid a repeat of this crisis, it is essential that we preserve the foundations of democratic capitalism - a commitment to free markets, free enterprise and free trade.
"We must resist the dangerous temptation of economic isolationism and continue the policies of open markets that have lifted standards of living and helped millions of people escape poverty around the world."
The decision to hold a global summit on the crisis represents a concession to European leaders, who have been pressing for such a meeting against resistance from Washington. The summit, expected to be held in New York before the end of the year, is likely to include the member states of the Group of Eight - the US, Japan, Germany, Britain, France, Italy, Canada and Russia.
Developing countries such as China, India, Brazil and South Korea may also be invited, along with Saudi Arabia, South Africa, Switzerland and Australia.
Mr Sarkozy said the summit offered an opportunity to build "the capitalism of the future" as well as addressing the current crisis. "This may be a great opportunity if we do not fall back into the hateful practices of the past - practices that have led us exactly where we are right now," he said.
"The president of the United States is right in saying that protectionism and closing one's borders is a catastrophe. He is right to say that it would be wrong, catastrophic, to challenge the foundations of market economics. But we cannot continue along the same lines because the same problems will trigger the same disasters."
Mr Barroso said the EU had already acted decisively to agree a common framework on measures to address liquidity in interbank markets, recapitalisation of banks, and guaranteeing bank deposits.
He added, however, that global co-ordination was needed to overhaul the financial system and the EU and the US must play a leading role in such reform.
"The international financial system, its basic principles and regulations and its institutions, need reform. We need a new global financial order," he said.
"Together, the EU and the US, we can make a difference together. We should show the way towards an international response to the financial crisis and contribute to global growth."
Meanwhile, South Korea said yesterday it would guarantee $100 billion (€74.5 billion) in bank debts and supply lenders with $30 billion in dollars to stabilise its financial markets.
The government will provide tax benefits for long-term equity and bond investors, while the Bank of Korea will buy repurchasing agreements and government bonds to boost the liquidity of its currency, the won, the heads of the finance ministry, central bank and financial regulator said in a statement from Seoul.
South Korea is struggling with Asia's worst-performing currency, a shortage of US dollars and a stock market that has lost 38 per cent this year.
The guarantee on bank debts comes after Standard Poor's said last week it may cut the credit ratings of the nation's largest lenders, which triggered the worst plunge in the won since the International Monetary Fund bailed the nation out in December 1997. - (Additional reporting: Bloomberg)
