The G20 says there must be a global solution to current problems
World leaders are meeting in Washington to discuss reforms to tackle the current economic crisis. We explain why the meeting has been called and what it might accomplish.
What is the G20?
The G20 is a group of the world's most powerful countries that represent 85% of the world's economy. It includes both major industrial powers like the US and Germany, and emerging market countries like Brazil and China.
It was set up after the Asian financial crisis in 1999 to discuss international co-operation among finance ministers and central bankers.
Brazil and other emerging market nations believe that under the current set-up, they do not have sufficient representation within bodies such as the IMF and the World Bank.
So it was felt that any discussion of a new global financial system should include them as well.
Brazil currently chairs the G20 group. The UK will take over in 2009.
What is the aim of the Washington meeting?
The meeting was set up at the urging of European leaders including France's President Nicholas Sarkozy and UK Prime Minister Gordon Brown.
They believe that the cause of the global financial crisis was inadequate regulation of the financial sector, especially in the US.
And they would like to see more co-ordinated action to revive the world economy, both by more interest cuts and more spending by governments to bring countries out of recession.
They hope that the meeting will agree a blueprint for future reform, including changes to the international organisations charged with regulating the world economy, such as the International Monetary Fund (IMF).
What is likely to be accomplished?
The meeting may focus on the need for short-term measures to stimulate the world economy and the financial system, including more guarantees to banks and possible increases in government spending worldwide.
There will also be some discussion of how to protect the poorer countries of the world from the effects of the crisis.
And they may focus on how the IMF could play a bigger role in managing future crises, acting as an early warning system.
While there may be some concern about currency instability, it is hard to see the meeting reaching a deal that affects the international currency markets.
What are the obstacles to any deal?
There are huge difficulties in reaching a comprehensive deal on reforming the world economy.
Firstly, the new US President, Barack Obama, has not yet taken office, and any agreement made by President Bush would have to be ratified by his administration and the Democratic Congress.
Secondly, there are big differences on how to regulate the world economy, with the US unlikely to agree to a single standard that would also apply to its domestic financial sector, as some Europeans want.
It is also unlikely to agree the tougher regulation of bodies such as hedge funds that some European countries want.
And giving more power to emerging market countries such as China and Brazil would mean taking away power and influence from European countries in the IMF and World Bank.
A new Bretton Woods?
Some leaders have urged the meeting to begin the process of launching a new global agreement to stimulate prosperity, similar to the Bretton Woods agreement in 1944 that created the post-war system of fixed exchange rates and established the IMF and the World Bank.
But there is little appetite to abandon the world of floating exchange rates, while free trade talks, also encouraged at Bretton Woods, have stalled.
The meeting might also seek to redesign those Bretton Woods institutions - but it is unclear what role the new institutions would undertake.
Finally, it may try to design a new system of global regulation of finance, but it would first have to reach a consensus on what the principles of regulation should be, and whether these should override existing rules, such as the Basel Accords, which regulate banking.
Full membership of the G20: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the US and the EU.