The world's 20 leading industrial and developing countries have failed to reach agreement on global reform after meeting in Berlin for the first time.

Finance ministers from the new G20 group hoped to outline a common approach to reforming the world's financial system, making it less likely that there will be a global meltdown.

But in the event, the bland communiqué from the meeting only called upon member states to "pursue sound national policies, including on foreign exchange rates, to help reduce the vulnerability of their economies to financial upheaval."

In an implied criticism of many developing countries, it called for countries to abandon attempts at maintaining fixed exchange rates.

The G20 "recognised that unsustainable exchange rate regimes are a critical source of vulnerability and that a consistent exchange rate and monetary policy is essential."

The meeting also called for further progress on trade liberalisation following the collapse of the world trade talks in Seattle.

But the meeting did not endorse the US proposal for a radical scaling down of the operations of the International Monetary Fund (IMF), the main body that provides financial support in a crisis.

Who will run the IMF?

But there was much discussion in the sidelines of the meeting over who should be the next head of the IMF, after managing director Michel Camdessus announced he was standing down before his term expired.

Germany claimed that it had garnered more support for its candidate, deputy finance minister Caio Koch-Weser.

But Japan said it was lobbying hard for Eisuke Sakikabara, the former vice-minister for international finance, and had gained the support of some Asian countries.

The United States, which by tradition does not occupy the position, was said to be lukewarm about both candidates.

The democratic deficit

The G20 was created in September in order to involve major developing countries like Korea and Brazil in structural reform talks.

They were at the centre of the crisis which had threatened to engulf the world economy. It was also a response to criticism of the role of the Group of Seven -made up of the world's leading industrial countries - in managing the last crisis.

The G20 includes Russia, Brazil, China Saudi Arabia and Mexico as well as the world's biggest industrial countries like the United States, Japan, and Germany.

The new club now accounts for about 80% of the world's productivity.

The fact that the G7 represents only 11% of the world's population had prompted criticism that it was unrepresentative.

European Central Bank executive Tommaso Padoa-Schioppa said the G7 had become redundant, while Bundesbank President Ernst Welteke even said that the G20 could replace the G7.

IMF reform

US Treasury Secretary Larry Summers plans to outline possible IMF reform in advance of the meeting.

He suggested limiting the IMF role to short-term financing, not providing long-term aid to struggling countries.

That position caused controversy as many of the developing countries who received big IMF loans will be present.

The IMF has lent more than $100bn to countries like Brazil, South Korea and Russia to prevent global financial meltdown.

Japan voiced some reservations about the US plan. A government official said long-term lending was sometimes necessary.