The European Governments, especially EU led by President Nicholas Sarkozy of France, argued in Washington at the G20 summit (14-15 November) that since the 1980s, finance has become a quintessentially global phenomenon with money and credit flows washing (excessively) across borders. 
(Since 2000, for example, banks' international obligations grew from less than $12tn or 20% ratio to world GDP at end-2000 to more than $37tn or 60% ratio to world GDP by end-2007. This growth coincides with growth in world trade & trade payments imbalances and the rise in securitization of bank assets that caused the present credit crunch). 
Sarkozy said that financial entities are thus able to exploit the inability of nation states to tax or regulate them (international banks) effectively. Consequently, Europeans call for a new global financial architecture that starts with, and gives primacy to, new cross-border global financial regulatory authorities. These global institutions are currently established. 
The idea is to extend all of them to a wider membership, to be constructed, and will be a G20 core project for the immediate future including placing the IMF more centrally, which not all emerging economies may welcome? 
The Europeans note that existing international regulatory institutions, like the Basel Committee on Banking Supervision and the Financial Stability Forum, have very limited membership, cannot issue binding standards and rules, are heavily influenced by the financial lobby, and have proven to be totally inadequate both in predicting the financial crisis and in acting to stem it. All this made it into the final G20 statement that the European Commission is now busy working on, and this will include expanding G20 to work with G192 (the DOHA grouping of countries) and the UN. The United States’ (last days of the Bush administration) posed a counter-argument that rested on the integrity unto itself of the nation state, locating the primacy of regulatory authority in national governments, and only adds new, cross-border forms of transnational collaboration and co-ordination. This reflects the stance of the US towards international bodies of the last 8 years, but can be expected to change dramatically under the new incoming Obama administration.
The USA's legacy position on global reform starts with existing national regulatory regimes, upgrading them considerably (USA is at least 1 year behind Europe in implementing Basel II prudential rules), and expanding them to encompass new financial instruments and institutions heretofore unregulated.
Both sides agree in the importance of more transparency that includes bringing credit trading into regulated exchanges or at least clearing houses and examining the role and qualities of credit ratings agencies. This ought to include the qualities of major stock exchanges.
The North Americans (with UK support) argue that a national-based approach offers the best tools for the broadest possible political control because it is rooted in oversight by national governments, their executives and parliaments, which are themselves subject to popular (democratic) oversight, however imperfect. Behind these arguments, however, lie both ideology and the desire to protect the U.S.’s and UK’s financial sectors’ competitiveness as the dominant global financial industry centres. (Note that half of the EU's financial assets are managed and traded in the UK). The G20 Communiqué avoided direct reference to the national/ multinational debate and papers over any cracks between the U.S. and European positions. Several other Atlantic fault-lines emerged at G20, such as between a monetary and fiscal response, between reducing the market price of borrowing or more Government borrowing and spending. 
Europe wants to go faster, broader, and deeper with new regulations than the U.S. and wants more co-ordination of policy interventions, but does not translate this also into more global spending to recover faster out of recession. The risks of the G20 Communiqué are that some governments will pay more attention to the interests of their own financial lobbies than to the interests and urgent neglobally of their own citizens equitably with citizens worldwide, and that the emerging markets, developing economies, where over two thirds of the world's population live will see in this merely a power-grab by the club of rich nations seeking world dominance by financial means? The Communiqué refers to the "fight" against unccoperative states and tax havens (though these are usually places with tiny populations, but might in certain aspects apply to BRIC states - Brazil, Russia, India, China). 
A host of immediate measures have been agreed to in the G20 Communiqué to be done by the next G20 meeting in March 2009, and pushing into the long grass the Atlantic Trench divisions that some might see as between the Anglo-Saxon model of liberal finance and the European of social welfare responsibility? The irony of this is that the USA has actually been far more generous externally than the EU, not least by running historically massive trade deficits (c. $1tn) that have fed into BRIC countries' high growth rates. 
The new OBAMA administration has indicated it will be more inclusive globally, but it faces domestic protectionist lobbying. If its fiscal stimulis package (worth 8% ratio to GDP) and financial stability measures show signs of working during 2009, it will have the space to formulate new positions closer to that of the EU. The effectiveness of G20 lies in the detail and that still has to be worked out. Principles, broad guidelines and indicators as to specific criteria e.g. Basel II and whatever a new Bretton Woods will indicate are on the official agenda. There are four that can become minimum demands:1. Total transparency – all financial instruments and all financial institutions to report fully on quality of markets and transaction data and this information made available to the public;
2. All banking assets & liabilities backed by capital reserves under Basel II, especially the economic capital calculation for buffer reserves to limit uninhibited leveraging;
3. All current and future financial instruments, and all systemically important financial service firms, market institutions, investment houses and financial information services brought under global standards of financial regulation;
4. New national and global regulatory systems to be subject to the widest and deepest democratic participation, including oversight, monitoring, and access to decision-making with participation of all G192.
The global financial meltdown is one of several converging world economic system crises caused largely by a free-for-all market fundamentalism over the need for civic responsibility globally, which is one way of seeing the matter, or it is more directly the result of severe trade and payments imbalances.
This neo-liberalism has permeated especially OECD countries' governance systems at every level: local, national, regional, and global. Consequently, as global problems worsen to converge with financial crisis and recession cycles, so too may inequality within and across alll borders. 
The same recklessness that led to insolvency at the core of financial systems is also at risk of a pro-cyclical response that deepens inequality world-wide over the coming decades. The financial crisis (credit cycle) is doubling the downturn (depth and persistence) in economic cycles. The private financial institutions receiving taxpayer bailouts should be obliged to lend to the real economy in order to ease the transformation to recovery, and to an environmentally more robust world economy.
