EU urges reform as Asia joins bailout

European leaders today pressed for an overhaul of global financial structures after Asia joined a number of western countries in bailing out banks to avert financial meltdown and tackle looming recession.

EU leaders arrived in Brussels after committing €2.2 trillion to rescue European banks and break a logjam in money markets that has choked off lending in the worst financial crisis since the Great Depression.

Washington followed with similarly radical state action to stem a crisis which began with a US housing market collapse and now threatens economies worldwide. The ructions of recent weeks have exposed glaring shortcomings in international financial structures developed after the second World War.

"The IMF (International Monetary Fund) has got to be rebuilt as fit for purpose ... We need an early warning system for the global economy," British prime minister Gordon Brown told reporters in Brussels.

German Chancellor Angela Merkel also told her parliament new international financial rules were needed with the International Monetary Fund taking on a bigger supervisory role.

The United States put its shoulder to the wheel on Tuesday by offering to take $250 billion worth of stakes in its banks, an astonishing move in the home of free market capitalism which suggests an appetite for new regulation even there, with a US presidential election less than three weeks away.

Southeast Asian nations, backed by $10 billion from the World Bank, were the latest to join the rescue effort, agreeing to create a multi-billion fund to help banks.

The fund will buy up toxic debts and support banks in the region, Philippines President Gloria Macapagal Arroyo said.

Reuters