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Sunday October 12, 6:35 PM Economic powers stress joint action against feared 'meltdown' Photo: AFP Click to enlarge WASHINGTON (AFP) - Key nations threw their support behind efforts to tackle the financial turmoil and amid grim warnings of a "meltdown" European leaders pledged their own action ahead of a crisis summit on Sunday. With governments anxiously hoping to calm markets, the Group of 20 countries which account for 85 percent of the global economy said they had agreed to use "all financial and economic tools" to calm the storm. The Washington meetings and others around the world stressed that efforts would be coordinated. The G20 said action would be "closely communicated so that the action of one country does not come at the expense of others or the stability of the system as a whole," said a joint statement. The 20 nations endorsed a five point plan agreed by the Group of Seven (G7) industrial powers at the weekend meetings in Washington to prevent the "failure" of key financial institutions. Two weeks after the collapse of Lehman Brothers and other US firms which set off a worldwide shares crash, the plan is vague on details, but commits countries to support the most important institutions, take measures to get credit flowing, assist banks in raising capital and reassure savers. US President George W. Bush said the world's richest economies were united on a "serious global response" to the financial meltdown. International Monetary Fund chief Dominique Strauss-Kahn claimed a breakthrough with the first global pledge to cooperate to stabilise the turmoil. He had earlier warned, however, that the financial system risked collapse. "Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown," he said. Attention moved Sunday across the Atlantic to a Paris summit of the 15 nations that have adopted the euro currency, plus Britain, which was to discuss its own package. French Finance Minister Christine Lagarde promised the world would "not be disappointed" by the measures to be adopted. No details have yet been released, but there were signs that the 15 were leaning towards adopting a British-style operation under which the state guarantees inter-bank lending and buys stakes in banks. French President Nicolas Sarkozy, current head of the European Union, was to host first Britain's Prime Minister Gordon Brown and then hold the summit at the Elysee Palace. Sarkozy already met German Chancellor Angela Merkel on Saturday in France, stressing their unity the day before the summit. Britain, which is reportedly on the verge of taking stakes in several key banks, is counting on this voluntary part-nationalisation to unfreeze capital and restore confidence. French finance minister Lagarde said the Paris meeting would discuss the possibility of guaranteeing interbank lending -- a measure to get credit markets working again so banks feel confident enough to start making fresh loans. There will be "without doubt a debate" on the issue, she said. Brown warned European leaders ahead of the summit they were facing a moment of truth and pledged Britain would "lead the way" out of the credit crunch. "What the events of this week have shown is that this is a global problem that requires a global solution," Brown wrote in the Sunday Mirror newspaper. "I am going to Paris to persuade other European countries to adopt the comprehensive approach we have taken in Britain. For Europe, the stakes could not be higher and this is a moment of truth." Coordination against the financial crisis is considered vital to prevent the actions of one country harming another and exacerbating the problems of bank solvency and credit shortages. In the Great Depression of the 1930s, so-called "beggar-thy-neighbour" measures taken unilaterally by countries are considered to have deepened the economic pain. Meanwhile, Australia became the latest country to guarantee all deposits in domestic banks. Japan and South Korea agreed to push ahead with plans for a foreign exchange pool to be used in the event of an Asian financial crisis, reports said. Japanese Finance Minister Shoichi Nakagawa and his South Korean counterpart Kang Man-Soo agreed to help launch a multilateral currency swap scheme for Asia, when they held talks in Washington on the sidelines of the Group of Seven finance chiefs' meeting, Jiji Press and Kyodo News reported. The ministers agreed to speed up implementation of an agreement in May by finance ministers of 13 Asian nations to set up a foreign exchange pool of at least 80 billion dollars (52 billion euros) to be used in the event of a regional financial crisis, the reports said. A top Chinese central banker criticized rich nations for the problems in the global financial system, and called on the IMF to improve its monitoring of developed nations which had "weak financial policy discipline."