WASHINGTON: Key nations threw their support behind efforts to tackle the financial turmoil and amid grim warnings of a "meltdown European leaders pledged their own action ahead of a crisis summit Sunday. With governments anxiously hoping to calm markets, the Group of 20 countries which account for 85 percent of the global economy said they had agreed to use "all financial and economic tools to calm the storm. The Washington meetings and others around the world stressed that efforts would be coordinated. The G20 said action would be "closely communicated so that the action of one country does not come at the expense of others or the stability of the system as a whole, said a joint statement. The 20 nations endorsed a five point plan agreed by the Group of Seven (G7) industrial powers at the weekend meetings in Washington to prevent the "failure of key financial institutions. Two weeks after the collapse of Lehman Brothers and other US firms which set off a worldwide shares crash, the plan is vague on details, but commits countries to support the most important institutions, take measures to get credit flowing, assist banks in raising capital and reassure savers. US President George W. Bush said the world's richest economies were united on a "serious global response to the financial meltdown. International Monetary Fund chief Dominique Strauss-Kahn claimed a breakthrough with the first global pledge to cooperate to stabilize the turmoil. He had earlier warned, however, that the financial system risked collapse. "Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown, he said. Attention moved Sunday across the Atlantic to a Paris summit of the 15 nations that have adopted the euro currency, plus Britain, which was to discuss its own package. French Finance Minister Christine Lagarde promised the world would "not be disappointed by the measures to be adopted. No details have yet been released, but there were signs that the 15 were leaning towards adopting a British-style operation under which the state guarantees inter-bank lending and buys stakes in banks. French President Nicolas Sarkozy, current head of the European Union, was to host first Britain's Prime Minister Gordon Brown and then hold the summit at the Elysee Palace. Sarkozy already met German Chancellor Angela Merkel on Saturday in France, stressing their unity the day before the summit. Britain, which is reportedly on the verge of taking stakes in several key banks, is counting on this voluntary part-nationalization to unfreeze capital and restore confidence. Lagarde said the Paris meeting would discuss the possibility of guaranteeing interbank lending - a measure to get credit markets working again so banks feel confident enough to start making fresh loans. There will be "without doubt a debate on the issue, she said. Brown warned European leaders ahead of the summit they were facing a moment of truth and pledged Britain would "lead the way out of the credit crunch. "What the events of this week have shown is that this is a global problem that requires a global solution, Brown wrote in the Sunday Mirror newspaper. "I am going to Paris to persuade other European countries to adopt the comprehensive approach we have taken in Britain. For Europe, the stakes could not be higher and this is a moment of truth. Two London newspapers reported Sunday that the British government was preparing to take controlling stakes in Royal Bank of Scotland and HBOS, two of Britain's largest banks that have been hit hardest by the financial crisis. The unprecedented move would make the government the biggest shareholder in the banks and government representatives would be installed on their boards, the Sunday Times and Sunday Telegraph newspapers reported. For her part, Merkel said only the state could restore trust to financial markets now, amid reports that Berlin was about to unveil a huge rescue package for its banks. "In this it is important that countries do not act unilaterally but that we coordinate at European and international level and then implement the measures within our national responsibilities, Merkel was quoted as saying Sunday by the Bild am Sonntag weekly. Coordination against the financial crisis is considered vital to prevent the actions of one country harming another and exacerbating the problems of bank solvency and credit shortages. In the Great Depression of the 1930s, so-called "beggar-thy-neighbor measures taken unilaterally by countries are considered to have deepened the economic pain. Meanwhile, Australia and the United Arab Emirates became the latest countries to guarantee all deposits in domestic banks. In Asia, Japan and South Korea agreed to push ahead with plans for a foreign exchange pool to be used in the event of an Asian financial crisis, reports said.
