Leaders of world economic powers agreed Thursday to a mix of financial assistance and regulation designed to fight off the worst recession since the 1930s, as a one-day summit in London came to a close.
British Prime Minister Gordon Brown said the G-20 leaders would pump more than $1.1 trillion into the world economy through the International Monetary Fund and other organizations and impose stricter regulations on financial institutions that include oversight of executive pay, tax havens and hedge funds.
"We are rebuilding the international financial system so that it serves the people, rather than, as on occasion, it has served itself," Brown said at the close of the daylong summit.
He said the plan includes tripling the resources available to the IMF to $750 billion, supporting $250 billion in IMF reserves called Special Drawing Rights and ensuring $250 billion to support trade.
Brown, the summit host, said the European Union and Japan have each agreed to contribute $100 billion to boost IMF resources, and the U.S. suggested it might contribute a similar amount. China will contribute $40 billion and gain more power at the IMF, he said.
The G-20 leaders –- who include the leaders of 19 industrial and developing countries and the European Union –- also asked the IMF to open sales of its gold reserves to raise money to help poor countries.
Attending his first international summit, President Obama lauded the actions taken by G-20 leaders, saying he believes the group made strides toward turning around the global economy.
"I'm excited about the ability not just to help heal this economy but also to make progress on a sustainable model of economic growth that relies less on a cycle of bubble and bust — something that I've spoken about back home," Obama told a news conference.
He acknowledged that other world leaders "indicated from their perspective that this [financial problem] started in America, or this started on Wall Street, or this started with particular banks or companies.
"You know, perhaps what helped was my willingness to acknowledge — and it's hard to deny — that some of this contagion did start on Wall Street," he said. But he also noted, "I think that part of the reason people didn't give me too hard a time is because if you look at European banks or Asian banks, they've had their own issues."
In addition to the financial pledges by the G-20, Obama said he plans to ask Congress to provide $448 million in assistance to vulnerable populations from Africa to Latin America and double the amount of money the U.S. provides for food safety to more than $1 billion.
Although G-20 leaders skirted the issue of pumping additional stimulus money into their home economies, Brown said the actions that have been taken thus far will put an additional $5 trillion into the economy by the end of next year.
"Together with the measures we have each taken nationally, this constitutes a global plan for recovery on an unprecedented scale," Brown said.
Those actions will restore credit, stimulate growth and save or create millions of jobs in the global economy, he said.
The G-20's closing statement also said that world leaders agreed to the creation of a new supervisory body to oversee the global financial system. That includes reining in excessive pay for executives, regulating hedge funds and publishing a blacklist of tax havens.
Acknowledging that problems in the U.S. financial industry were a factor in the current economic meltdown, Obama said he supported the move for greater oversight.
"We thought it was important to make sure that we had a strong, coordinated regulatory response, and many of the details of the regulatory response draw from principles that we had developed prior to coming here," Obama said.
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