To dissuade reckless risk-taking in the banking sector, EU leaders are poised to adopt a strong stance on bankers' bonuses, actually threatening sanctions in each of the G20 countries, said the draft document.
Rules on bonuses should ensure that the boards of financial institutions have oversight of the amounts paid and the risk involved. There should be no guaranteed bonuses and the system would be more transparent, according to the paper.
Speaking on French television, Jean-Pierre Jouyet, head of France's market watchdog, said there was broad agreement on most of the regulatory themes to be discussed at the G20 meeting.
But US opposition to Europe's push for caps on bonuses would make it the toughest subject to reach agreement on, said Jouyet, who this week attended a meeting of the Financial Stability Board (FSB), comprising G20 central bankers and regulators.
The FSB said banks with low levels of capital would not be able to offer large bonuses under guidelines the G20 is due to discuss.
"There is a difference between Europe and the United States on the bonuses. It's the point which today is the most difficult to resolve," said Jouyet, who heads France's regulator, the AMF.
Coordinated exit strategy, but not now
"The G20 should reaffirm its determination to continue implementing coordinated policy measures in order to develop the basis for sustainable growth and to avoid a repetition of the present financial crisis," the draft EU document showed.
"Efforts must be maintained until recovery is secured," continued the draft, referring to the need for a concerted global exit strategy to be implemented once national economies are showing a robust return to growth.
EU Economics and Monetary Affairs Commissioner Joaquin Almunia noted this week that member states with sound finances should maintain their fiscal stimuli to spur the fragile economic recovery.
IMF's key role in policy coordination
Heads of state and government of the 27-member bloc will also call for the International Monetary Fund to be given a key role in global policy coordination and inject into the international institution a total of 125 billion euros of extra funding.
That would be a substantial increase from the 75 billion agreed earlier this year.
More transparency in oil markets
EU leaders will also join the United States in calling for action to improve transparency in oil markets.
The United States is expected to call on the G20 nations to increase oil market transparency when the group meets in Pittsburgh.
"The G20 should commit to improving energy security by increasing oil market transparency and contain speculation," said the draft.
Such action would include "reporting comprehensive data on domestic oil markets and taking steps to oversee the over-the-counter markets so that regulators have a more complete view into the actions of market participants," said the draft paper.
Transparency and speculative activity have become an issue in commodity markets following the six-year record run that sent oil to all-time highs near $150 a barrel last year, battering the economies of import-reliant nations.
The United States has already taken steps to improve its domestic data collection quality and increase the information provided by speculators in weekly trader commitment reports released by the Commodity Futures Trading Commission (CFTC).
