"With the rising economic powers, the G7 countries can work through this crisis by dealing with bad assets, recapitalizing banks, and providing much needed liquidity," said Robert Zoellick, president of the World Bank. "They need to work together to fix the financial, regulatory, and supervisory system that failed."

The G7 will begin meeting on Friday, followed by the annual IMF/World Bank meeting from Oct. 11-13.

"In our view, this current crisis gives the IMF an opportunity to reassert itself as a major player in the global economy," said the currency strategy team at BBH. "[T]he IMF is one of the few institutions right now that has liquidity, and most likely will start to parcel out that liquidity as this crisis deepens."

Zoellick said the G7 nations need to take action to help emerging economies deal with the crisis. "I hope the G7 will point toward coordinated action to show that authorities are getting ahead of the curve," he aded.

The G7 is represented by finance ministers from the U.S., Britain, Canada, France, Germany, Italy and Japan. Earlier in the week, Zoellick said the G7 was no longer effective and needed to be replaced with a body that includes emerging economies.

"We need a core group of Finance Ministers who will assume responsibility for anticipating issues, sharing information and insights, exploring mutual interests, mobilizing efforts to solve problems, and at least managing differences," he said.

Similarly, U.S. Treasury Secretary Henry Paulson called for a G20 meeting on Saturday, though as of Thursday evening the proposed meeting has yet to be confirmed.

"In consultation with Brazil, the G20 president, I am calling for a special meeting of the G20 that will include senior finance officials, central bankers, and regulators from key emerging economies to discuss how we might coordinate to lessen the effects of global market turmoil and the economic slowdown on all of our countries," Paulson said on Wednesday.

After Wednesday morning's global co-ordinated rate cuts from six central banks, Paulson called the action "a welcome sign that central banks around the world are prepared to take the necessary steps to support the global economy during this difficult time."

U.S. President George W. Bush will host the G7 finance ministers on Saturday. After speaking with the president of Slovakia on Thursday morning, Bush told reporters the two leaders "talked about our common desire to work with our European friends to develop a best as possible common policy." In recent days, Bush has also spoken with leaders of Germany, Brazil, Britain, France and Italy.

In a briefing on Thursday, IMF Managing Director Dominique Strauss-Kahn urged European countries to work together on the global crisis, saying there are "no domestic solutions" to the turmoil. "The situation is very serious, but at the same time that we can solve problems if we act quickly, forcefully and cooperatively," he said.

Also on Thursday, the IMF announced it had reactivated an emergency finance mechanism to help countries hurting from the turmoil. The scheme, which was last used in 1997 during the Asian financial crisis, is aimed at accelerating the approval of loans.

"I have yesterday (Wednesday) activated emergency procedures of the IMF to respond quickly with high-access financial programs based on streamlined conditionality which is focused on the crisis-response priority," Strauss-Kahn said at a news conference.

Not all analysts are enthusiastic about the IMF's action. Dean Baker and Mark Weisbrot, co-directors at the Center for Economic and Policy Research, said of the upcoming meeting: "The IMF's failure to provide advance warning of most of the major financial crises of the last 15 years and its record of suggesting inappropriate remedies after the fact, raise serious questions about its ability to perform this function."

Abiel Reinhart, Canada and U.S. economist at JPMorgan Chase, said the meetings will focus on policy actions regarding liquidity management, financial system reforms and interest rate decisions. However, he warned the weekend could be anticlimactic for those with big expectations.

"At the very least there will be a joint statement... but there won't necessarily be new policy actions," he said.

One thing can be fairly certain: markets will be glued to the headlines from the meeting, and speculation will abound on what actions individual countries may take to stabilize their financial sectors.

Highlights on Friday will include speeches from French Economy Minister Christine Lagarde; Eurogroup President Jean-Claude Juncker; EU Economic and Monetary Affairs Commissioner Joaquin Almunia; ECB Executive Board member Lorenzo Bini Smaghi; IMF Managing Director Dominique Strauss-Kahn; ECB Governing Council member Christian Noyer; and South African Finance Minister Trevor Manuel.

Following the G7 meeting, U.S. Treasury Secretary Henry Paulson will hold a news conference, followed by another euro news conference featuring ECB President Jean-Claude Trichet, Juncker and Almunia.

By Patrick McGee, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, This email address is being protected from spam bots, you need Javascript enabled to view it

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