GORDON BROWN hailed the emergence of a new world order and Kevin Rudd declared cowboy capitalism dead following yesterday's historic agreement to hasten the end of the global recession and implement new rules and regulations to prevent it happening again.
The Group of 20 leaders agreed to meet again before the end of the year, possibly in New York or Washington, to check on the progress of implementing their plan, which aims to return the globe to positive growth by the end of 2010.
The centrepiece of the London summit was the commitment to spend $US1.1 trillion to tackle the crisis, including trebling the resources of the International Monetary Fund to $US750 billion.
Member nations will kick in an extra $US500 billion while the IMF raises $US250 billion by increasing its special drawing rights. The money will be available to prop up failing nations and maintain jobs and growth.
"The IMF is the thin blue line between failing national economies and global financial chaos," Mr Rudd said.
Another $US250 billion was set aside for trade finance to keep credit-squeezed nations trading.
The G20 went further than expected in agreeing to unprecedented financial regulations and a crackdown on tax havens. "The era of banking secrecy is over," the summit communique said.
Nations pledged to humiliate and sanction tax havens that refused to co-operate with OECD rules to fight money laundering and tax evasion.
Straight after the summit, the OECD blacklisted as uncooperative tax havens the nations of Costa Rica, Malaysia, the Philippines and Uruguay.
The summit agreed to adopt new rules by the end of this year on pay and bonuses for bankers with the aim of limiting the rewards for risk-taking.
The Rudd Government recently commissioned a Productivity Commission report into all executive salaries but it is not due to report until next year.
The Prime Minister did not rule out making changes to the financial sector before then. "These two exercises must proceed in tandem with each other because we have financial institutions which operate in a global financial environment."
The G20 agreed to rename the Financial Security Forum the Financial Stability Board. It would be beefed up and work with the IMF to monitor global financial transactions and provide an early warning system and remedies for risky behaviour.
Oversight and regulation would be extended beyond banks to other systemically significant institutions like hedge funds and insurance companies.
Bodies to be known as colleges of regulators will monitor institutions that operate in more than one country while the much-maligned credit rating agencies would be subject to greater oversight and regulation to prevent conflicts of interest.
"Today's agreement begins to crack down on the sort of cowboys in global financial markets that have brought global markets undone with real impacts for jobs everywhere," Mr Rudd said.
"It's been prime ministers and presidents who have struck this deal but it's small businesses, tradies and young people who will benefit from it over time because global action is necessary to support local jobs."
The G20 agreed nations should purge their banks of toxic assets, which are clogging the flow of credit.
The US President, Barack Obama, whose co-operative attitude was considered by G20 insiders as the key to the summit's success, said yesterday was a turning point in the fight against the recession.
"Together we must put an end to the bubble-and-bust economy that has stood in the way of sustained growth and enabled abusive risk-taking that endangers our prosperity," he said.
Mr Brown said: "This is the day the world came together to fight back against the global recession, not with words but with a plan for global recovery and reform."