Washington - Leaders from the Group of 20 nations gathered Friday for an historic summit to address a financial crisis that has sent global stock markets plummeting and threatened to plunge the global economy into recession. US President George W Bush will welcome the leaders of 20 countries to the White House for a working dinner Friday evening and the group will hold an intensive day of talks Saturday aimed at overhauling the world's financial system and spurring global growth.
It marks the first ever summit meeting of the G20, a bloc that brings together leading industrial nations and emerging economies, and comes amid growing pressure for significant changes to the regulatory structures governing the global financial system.
European leaders have sought a dramatic overhaul to keep financial firms in check, while developing countries are looking to contain the fallout spreading from the crisis that began in the United States and other advanced economies.
"We cannot leave here empty handed," said Guido Mantega, finance minister of Brazil, which chairs the G20.
Emerging economies were coming to Washington hoping to see the G20 meeting of government leaders become a regular event.
"The G7 is too narrow and too small," Indian Finance Minister P Chidambaram said on the plane to Washington, according to PTI news agency. "An inclusive system which can serve as a global oversight and serve as a nearly warning system is needed."
The leaders are meeting against the backdrop of a sharp economic slowdown, with banks curbing lending activities, reduced demand for consumer goods and a drop in commodity prices affecting the exports of developing countries. The International Monetary Fund last week forecast a global recession in 2009.
Global stocks have been decimated by the financial turmoil that began with a meltdown in the US mortgage market.
After rising in the days ahead of the summit talks, shares on Wall Street plunged nearly 4 per cent Friday in another round of volatile trading.
However, shares in Asia and Europe edged forward in the buildup to the Washington summit.
The G20 may call for its members to enact stimulus packages to boost spending in their economies. US Federal Reserve Chairman Ben Bernanke said in Frankfurt that central banks stood ready to take additional monetary steps if necessary.
World leaders plan to outline the principles of financial reforms on Saturday and set up a series of working groups to come up with specifics in the coming months. Europe, Brazil and others are pushing for another summit and a final plan to be developed in 100 days.
Among the changes are a possible "college of supervisors" to monitor the actions of the world's top financial firms and set up an "early warning system" to prevent the next financial crisis from spiralling out of control.
While the US has been hesitant to agree to any drastic overhauls of the financial structure, White House spokeswoman Dana Perino Friday said the US was "supportive" of both ideas.
Other international financial institutions could also get a strengthened role, including the International Monetary Fund and the Fiscal Stability Forum.
The world's top banking lobby, the Institute of International Finance, also recognized that significant changes were on the way.
"There is a clear consensus that the weaknesses in the global financial system that have been exposed over the last year call for substantial changes in the system's architecture," IIF Managing Director Charles Dallara said after a meeting of the group in New York.
Though hosting the gathering, Bush's clout at the summit will be limited as many governments are already looking toward the incoming administration of Barack Obama, who will be inaugurated January 20.
Obama will not attend Saturday's meeting but sent former secretary of state Madeleine Albright and former Republican Congressman Jim Leach to meet with world leaders on his behalf.
Both Albright and Leach are scheduled to meet with the leaders of South Korea, Argentina, Australia, Turkey and Mexico along with representatives of 10 other nations.
Bush has recognized the need for updating the regulations but pushed back against any wholesale reorganization of the financial industry.
"We must recognize that government is not a cure-all," Bush said in a radio address to be released Saturday. "The crisis was not a failure of the free market system, and the answer is not to try to reinvent that system."
A draft of the G20's final declaration was already being circulated Friday and other leaders expressed confidence that a strong deal was well advanced.
Many developing countries coming to the meetings having emerged from devastating economic crises in the last decade, including nations in Asia and Latin America.
Turkish Prime Minister Recep Tayyip Erdogan said he hoped to "share the experiences of the crisis" that engulfed Turkey about seven years ago.
Developing countries "can play an important example for countries to help find a way out of this crisis," Erdogan said.
