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Financial reform rifts may overshadow G20 summit
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As world leaders prepare to gather for the upcoming G20 summit in London, disagreements remain on how to reform the global financial structure to prevent a repeat of the financial crisis.

President Horst Koehler of Germany, a former managing director of the International Monetary Fund (IMF), has demanded a complete reorder of the global financial markets.

Koehler said earlier this week that financial oversight should cover all financial institutes and products.

He is supported by many world leaders who want reforms for such world monetary bodies as the IMF and World Bank.

On Monday, British Prime Minister Gordon Brown said the IMF could have a "more active" role as an overseer of the world economy and provide "early warnings" of impending international crises in the financial sector.

The World Bank, meanwhile, could turn its attention to environmental as well as development issues, Brown said.

On March 20, EU leaders agreed to push for a doubling of the IMF's resources to 500 billion US dollars.

The finance ministers of Brazil, Russia, India and China have also called for effective steps to increase the voting rights and representation of developing countries in the world monetary body.

The global economy has undergone great changes since the end of the Cold War and the current IMF reflects an outdated voting structure and distribution of economic power.

Western nations, especially the Europeans, have far too many votes and seats on the executive board while emerging economies, such as China and India, have too few.

The inherent defects of the IMF have been highlighted by the current global financial crisis, and the increasing importance of emerging economies have made reform of the IMF indispensable, analysts say.

"Quotas" determine how much a country must contribute to the IMF capital, how much it can borrow, and how many votes it has.

Members of the European Union have 32 percent of the total votes. The United States, with 17 percent, still has a veto to any change of the system. China has just 3.7 percent and India 1.9 percent.

According to a reform plan approved at an IMF board meeting in April last year, developed countries' share of votes will decrease from 59.5 to 57.9 percent, while those of developing nations will increase from 40.5 to 42.1 percent. The dominant status of the developed countries remains almost unchanged in the world monetary body.

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