Financial Reform

European Union leaders agreed to the common position on reforming the global financial system after a meeting of 27 EU leaders in Brussels.

"There is a pretty detailed common position from Europe," French President Nicolas Sarkozy told a news conference. "We will be defending a common position, a vision … for restructuring our financial system."

He added that despite the general unity, there were still differences in emphasis among different countries.

German Chancellor Angela Merkel said the EU agreed that there was no place for protectionism in any measures to be agreed on in Washington next week.

Watered-down principles

At the summit, which was intended to prepare a common EU position for a meeting of the world's leading economic powers in Washington on November 15, EU leaders gave their backing to a watered-down set of principles drawn up by the French government, which currently holds the EU's rotating presidency.

Europe's four main demands are stricter regulation of financial markets, more responsible and transparent management, better crisis prediction and prevention, and a reinforcement of major international institutions such as the International Monetary Fund.

But following strong protests from some member states, EU leaders softened a key French call for all financial institutions around the world to be regulated.

The revised text approved by national leaders states that "no financial institution, no market segment and no jurisdiction must escape proportionate and adequate regulation, or at least oversight."

Creating deadlines

French President Sarkozy also said the EU will set a 100-day deadline for world leaders to decide global finance reforms. He says decisions could not be made immediately at the November 15 summit.

But he added that there is "no time to lose" and that the summit cannot just become a talk shop. EU nations are calling for a second summit next spring to push forward with reforms.

France has been eager for Europe to make its voice heard on the international stage, believing that the United States has been weakened by the financial crisis which began in American markets, which in turn gives Europe a chance to increase its influence.

Shouldn't over-regulate

Leaders on Friday also struck out two statements referring to an earlier, and far more detailed, French document as the foundation for future talks, arguing that it was too detailed to be acceptable.

"There is a risk that we over-regulate and that we are too quick in our response. That's why I say fewer but more effective regulations, and take the time to analyze to go through what is needed to be done," Swedish Prime Minister Fredrik Reinfeldt, who emerged as one of the main critics of the French text, said.

Sarkozy is now set to travel to Washington on November 15 to represent the EU in his capacity as holder of the bloc's presidency. The leaders of Britain, Germany and Italy are also set to attend the summit as permanent members of the so-called Group of 20.

The Czech Republic is due to send an official in its capacity as the next holder of the EU presidency. Spain and the Netherlands are lobbying for an invitation.