BBC Economics Correspondent Ed Crooks: An agreement full of good ideas but whose usefulness is yet to be proved

The proposals were outlined in London by UK Chancellor of the Exchequer Gordon Brown, who is currently chairman of the G7 finance ministers. Similar announcements were made in other G7 capitals.

Mr Brown said the reforms were designed to "strengthen the global financial system" and to head off future economic crises.

The centrepiece of the G7's proposals is a new facility for the International Monetary Fund to lend money quickly to countries facing financial market problems.

In Asia IMF loans took weeks to negotiate at a time of acute and worsening crisis. The G7 proposes:

• Setting up a new IMF fund worth $90bn for emergency lending to stop a crisis spreading into other economies. The money is to be complemented by private sector contributions.
• Tighter regulation of the world's international capital markets to prevent a repeat of the recent financial turmoil.
• A code of practice for private banks and businesses, designed to regulate highly leveraged companies like hedge funds.
• "Transparency rules" for companies to make financial transactions and dangers to the markets more visible.
• Setting an international code of conduct for monetary and financial policy in G7 countries.
• New rules for monitoring international capital flows.
• A new World Bank welfare fund to alleviate economic suffering among the most vulnerable people in the emerging economies

Clinton hails measures

In a speech at the White House, US president Bill Clinton hailed the package - of which he proposed the major measures.

Bill Clinton: For America's economy to grow, so too must the economies of its trading partners

He said "the world's leading economies had linked arms" to preserve growth around the world.

G7 leaders and finance ministers have been in close contact in recent months amid fears the emerging market financial crises which swept Asia and then Russia might spillover to Latin America and the West itself.

Concerns that the IMF had not been able to stem the spread of contagion quickly and effectively led to calls for an overhaul of the monetary agency and international financial mechanisms for stability.

The G7 is considered to be one of the most influential international groupings in the world economy; its members are the United States, Canada, Japan, Germany, France, Italy and the United Kingdom.

The emergency fund will be a lending mechanism to give countries quick access to money if they need to contain a financial crisis. The G7 statement said that it "would provide a contingent short-term line of credit for countries pursuing strong IMF approved policy."

Economic optimism

Gordon Brown said slow growth, not inflation is now the main risk for the world economy

The G7 appeared upbeat about the economic future. Mr Brown said that after interest rate cuts in several of the world's major economies, signs of stabilisation in Asia and new funding for the IMF, "there are some positive signs for the world economy."

However, many details of the G7 proposals are still sketchy. Mr Brown said working groups would now formulate the various codes for monitoring, fiscal conduct and corporate governance.

Germany and France, for example, are arguing for tight controls of international capital flows, a suggestion opposed by Washington and London.

During the past week, US President Bill Clinton had been on the phone to other G7 leaders to finalise the wording of the joint statement.

On Friday morning, Japan's Finance Minister, Kiichi Myazawa, voiced his doubts: "I am wondering whether now is the right time to issue such a statement, and so is the US and Germany."

There have been suggestions that the proposals will be discussed at a special G7 summit meeting of heads of state and governments, although no date has been set yet.

Mr Brown refused to confirm whether there would be a summit..

Brazil is a test case for the G7 ideas.

The country has already been promised a $30bn loan to help the government if its economic difficulties worsen.