EU LEADERS have agreed a strategy to push for sweeping reform of the world's financial system and set a 100-day deadline for the rest of the world to follow.
Under the five-point plan the EU wants to ensure that no market segment, territory or financial institution will escape regulation or oversight.
It also calls for the creation of codes of conduct to ensure executive pay does not promote risk-taking and reform of the International Monetary Fund (IMF) to ensure it can tackle financial instability.
"I can tell you that there is a common position from Europe with a view to the Washington summit. We will be defending a common position in Europe, a vision from Europe for restructuring our financial system," said French president Nicolas Sarkozy, who chaired the EU summit in Brussels yesterday as current holder of the EU presidency.
France called the extraordinary summit to forge a united European position ahead of next week's G20 summit in Washington which will address the financial crisis. The EU wants to set the agenda for wholesale reform of the financial system following the onset of what some economists predict is now the worst crisis since the Great Depression.
"The time when we had a single currency , one line to be followed, that era is over and it came to an end on September 18th when responsibility was taken without our opinion being asked with the failure of a major banking institution , and the consequences all follow from that," said Mr Sarkozy, who called on US president-elect Barack Obama to join with the EU in reshaping the world's global financial architecture.
It is unlikely that Mr Obama will attend the G20 summit on November 15th in Washington, which will be hosted by President George Bush.
US officials are taking a more cautious approach to EU calls for a radical shake-up of the world's financial system, and may prefer to take a slower approach to negotiations.
The EU strategy for reform has five guidelines: compulsory registration of credit-rating agencies; har-monisation of accounting standards across the world; ensuring that "no market segment, no territory and no financial institution, including geared funds" escape regulation or supervision; setting up codes of conduct on risk-taking, and pay and bonus levels; and giving the IMF sufficient funds to support countries in financial difficulty.
All EU leaders signed up to the broad thrust of the EU plan. However, behind the strategy there remains significant differences in emphasis between states.
On the way into the EU summit Swedish prime minister Fredrik Reinfeldt warned about "over-regulation", while German chancellor Angela Merkel only supported the EU strategy after forcing changes in a meeting with Mr Sarkozy.
Berlin has staunchly opposed a French idea to create an "economic government" of Europe for fear that Paris would use it as a way to undermine the independence of the European Central Bank.
It also recently opposed a Franco-Dutch idea to set up a common EU fund to help prevent any bank failures across all 27 EU states.
The EU strategy now calls for the European Commission to present ideas on how to co-ordinate EU measures to cope with the crisis and maintain employment levels.
British prime minister Gordon Brown said states should consider co-operating on economic policy to tackle the crisis. "There is now an emerging consensus that across the developed world it is right that fiscal policy should work in tandem with monetary policy to support economic growth."