"We're dealing with an extraordinary international crisis the likes of which we have not seen for decades, both as regards financial markets and the global economy. We believe that such an international crisis can only be solved jointly," said German Chancellor Angela Merkel.
According to a joint statement, leaders "underscored once again the conviction that all financial markets, products and participants must be subject to appropriate oversight or regulation, without exception and regardless of their country of domicile. This is especially true for those private pools of capital, including hedge funds, that may present a systemic risk".
European leaders proposed that the International Monetary Fund (IMF) and the Financial Stability Forum (FSF) be charged with monitoring and promoting the implementation of the international recommendations.
The necessary details of the plan must be worked out and become a part of the action plan, the statement reads, underlining that a list of uncooperative jurisdictions and a toolbox of sanctions be devised as soon as possible.
The leaders also agreed to support the doubling of IMF funds. British Prime Minister Gordon Brown said international institutions need some $500 billion, and called for a "global New Deal" to be adopted to help right the world economy.
"If I compare it with the Washington action plan, we've made our position much clearer on the pursuit of tax havens, and also as far as the institutions, products and the specific locations go," Merkel said.
European leaders backed the German chancellor's call for a "charter of sustainable economic activity" to reduce economic imbalances and stabilise financial markets. They also backed the idea that credit rating agencies should be subject to mandatory registration and oversight. According to Merkel, "one of the mistakes of the past was that banks did not build up a buffer of their own capital and have not been able to react to the crisis".
