World leaders vowed to work together to overhaul the financial system as they headed to Washington for a summit on wresting the global economy from recession and avoiding future meltdowns.
With host President George W. Bush in his final two months in office and president-elect Barack Obama not participating, hopes for a conclusive summit were low. Nevertheless, European leaders pressed for commitments to prop up sagging economies.
"We need to agree on the importance of coordination of monetary and fiscal policy," British prime minister Gordon Brown said en route to the meeting that begins with a White House dinner for political leaders tonight.
Finance ministers will hold a separate dinner at the US Treasury.
Mr Obama sent representatives, including former US secretary of state Madeleine Albright, to meet leaders on the sidelines of the meeting, but he stayed away personally.
German Chancellor Angela Merkel, at a news conference in Berlin before heading to the US capital, said there was pressure to relieve the crisis and ensure no repeat.
"The government will do everything to ensure there are more rules to prevent such a situation recurring," she pledged.
Canada's prime minister Stephen Harper will advocate strong national oversight of markets and international consultation, but will argue against global regulation as a way to solve the economic crisis.
Mr Harper said today measures aimed at stopping the meltdown must not infringe on national sovereignty or impede free trade. He made the remarks to reporters before traveling to Washington for a meeting of leaders from developed and emerging countries that make up the Group of 20.
"I don't think the major economies will ... consent to have external controls over their regulatory systems," the
Conservative leader said.
"Compulsory global governance ... is unrealistic, will never be accepted."
Mr Harper has frequently pointed out that the Canadian financial system has escaped relatively unscathed from the crisis and said its resilience showed the need for some sort of regulation - but only at a national level.
"Unregulated financial markets do not work. Canada has known that for a long time," he said at his Conservative Party's convention in Winnipeg. "I thought, frankly, we all knew that from events of many decades ago, but obviously the United States went on a different path."
Fresh US and European data underlined the severity of the downturn policy-makers face.
The euro zone tumbled into recession in the third quarter and US retail sales posted a record slump. Japan, the United States and Britain all are on the brink of recession, while China has slowed to destabilising levels.
Federal Reserve Chairman Ben Bernanke, speaking in Frankfurt, said central bankers around the world stood ready to do more to ease credit strains.
The Washington summit, which concludes tomorrow, brings together leaders from 19 nations and the European Union. It is officially a Group of 20 (G20) meeting, seating leaders from key emerging markets such as China, Brazil, India and South Africa with old-line industrial powers from the Group of Seven (G7) in what is likely the power constellation of the future.
But within the group many divisions remain.
Mr Bush yesterda pitched for modest reforms to preserve free markets, rather than stiffer financial regulation that some European nations favor to curb the excesses of capitalism.
In his weekly radio address, released today, Mr Bush said that "by working together, I'm confident that with time we can overcome this crisis". But he noted it will not happen quickly.
Financial oversight bodies proposed no major revamp of the world regulatory order.
Rather, the International Monetary Fund and the Financial Stability Forum, a group of finance authorities from leading countries, agreed to a three-tier regulatory plan that would keep the IMF's global oversight role, boost the FSF's role in setting standards for supervision and keep national authorities in charge of implementing them.
But some emerging market countries seek more radical action. China is flush with foreign exchange reserves of nearly $2 trillion. Saudi Arabia also holds ample reserves and some want to tap part of those reserves to more fully fund institutions such as the IMF, equipping them to rescue smaller economies hard hit by the financial crisis.
The meeting was billed as a chance for a shift in policy-making power to include emerging-market nations. But that may await negotiation, since it would require some rich countries to yield power, which is unlikely to come easily.
Leaders of the G20 developed and emerging countries, which represent 85 per cent of the world's economy and two-thirds of its population, will discuss ways to try to ensure the crisis, started by a US housing market crash, is not repeated.
But agreement is unlikely over whether more regulation of markets can protect consumers, savers and companies from the fall-out of such a crisis, when banks failed, savings were lost and small and medium-businesses collapsed.
Washington says there should be no return to greater state control of financial markets. Much of Europe says without more regulation, a repeat of the last year's turmoil is inevitable.
While investors waited to see what policy announcements would be forthcoming, some leaders dampened expectations.
European Commission President Jose Manual Barroso said he hoped to draw more emerging economies into global financial institutions such as the International Monetary Fund, saying Europeans were ready to lower their representation to make more room for countries such as China.
"There is an openness to accommodate an increased role of the emerging economies," the International Herald Tribunequoted Mr Barroso as saying.
Reuters/Agencies