ANALYSIS:Member state leaders have set a timeframe for other nations to back an overall blueprint, writes Jamie Smyth

EU LEADERS have agreed on a set of common principles to follow in their pursuit of a global deal to reform the world's financial system. They have also set an ambitious 100-day timeframe for the US and other leading economies to agree a blueprint for reform.

"I can tell you there is a pretty detailed common position from Europe with a view to the Washington summit," said French president Nicolas Sarkozy, who chaired yesterday's summit in Brussels. "This must not be a meeting where people just have an exchange of views. We should be able to come up with reactions to the crisis."

Europe wants the G20 summit in Washington to agree a second Bretton Woods, the financial agreement in 1944 that established the current financial system. Despite differences between EU states over the scope and detail of the reforms, yesterday's summit agreed on the principles the EU wants to see followed in the next week's talks.

These focus mainly on extending regulation to all actors in the financial sector with systemic importance. "No financial institution, no market segment and no jurisdiction must escape regulation or supervision," said a short paper circulated by the French presidency of the EU after the discussions summing up their common EU position.

It calls for more transparency from institutions by preventing them from omitting activity from auditable, certifiable accounts. It also calls for an overhaul of arrangements "conducive to excessive risk-taking" such as pay policy and debt-securitisation procedures. "Both prudential and accounting standards applicable to financial institutions will have to be revised to ensure that they do not contribute to creating speculative bubbles in periods of growth and make the crises worse at times of economic downturn."

The paper proposes giving the International Monetary Fund (IMF) a central role in managing financial crises and recommending measures needed to restore stability. It also calls for the setting up of colleges of supervisors to monitor the activities of large financial institutions operating across national borders in an effort to ensure better global supervision.

British prime minister Gordon Brown and Mr Sarkozy have both prioritised reform of the IMF as part of a global response to the financial crisis. Both leaders have also co-operated reasonably well over the last few weeks as the EU prepares a strategy, which it feels it can push the other main actors, the US, China, India and Brazil, to follow.

But Germany, in particular, has objected strongly to Mr Sarkozy's recent efforts to push for an "economic government" in Europe. His idea to appoint a permanent president of those member states using the euro and to pay state subsidies to industries in trouble has angered German chancellor Angela Merkel.

A frenzy of diplomatic activity was required in the days leading up to yesterday's EU summit to agree a common position. The French presidency of the EU was forced to radically redraft the position paper several times and it took a hastily arranged bilateral meeting between Ms Merkel and Mr Sarkozy yesterday to smooth over differences.

But getting agreement among EU states is the easy part when it comes to reshaping the global financial order. The 100-day timeframe set by the EU looks ambitious considering that president-elect Barack Obama only takes power on January 20th.

And there are already signs the EU insistence on tighter regulation may not play well in the US or Canada. Earlier this week, Canadian prime minister Stephen Harper warned that G20 leaders risked over-reacting to the financial crisis. Next week's meeting could herald the start of a process that runs longer than the 100 days the EU has set aside.