With financial markets in deep turmoil, the G20 summit this weekend faces stiff challenges to find a plan of attack to shore up the world banking system and avert future crises.
The summit of leaders of 20 major advanced and emerging economies could very well fall short of taking concrete measures, despite the broad-based concern over the possibility of global recession.
The European Union, led by the French, and some other members of the G20 want a new global financial order, as much as an entire remake of the 1944 Bretton Woods accord that set the basis for the world's financial system after World War II.
But host Washington under outgoing President George W. Bush has favored more limited initiatives, and has opposed creating a powerful supranational regulator.
The United States and the Europeans recognize the need for improved transparency in global finance and risk management, better coordination among national regulators, and more harmonization of accounting and capitalization rules.
Bush's Republican administration is looking for a "plan of action" -- recommendations for what individual countries can do -- to emerge from the summit Saturday, which will be preceded by an official working dinner Friday.
And yet even that is complicated, because just two months later Bush will be replaced by President-elect Barack Obama and his Democratic administration, leaving the follow-through on summit initiatives in question.
"What he could agree to would not commit Obama, and this is a problem," Ralph Bryant, a senior fellow at Brookings Institution, told AFP.
Bush is also hobbled by his support of the deregulation of financial markets that critics largely blame for the crisis .
"People are moving away from Bush and Greenspan" in their approach to regulation, said Bryant, referring to easy credit under the then-Federal Reserve chairman Alan Greenspan.
Greenspan retired in early 2006 as the US housing boom was beginning to collapse, triggering a subprime mortgage crisis that developed into the worst financial crisis since the Great Depression.
"Many things were inadequately regulated: CDS's (credit default swaps), other derivatives, no disclosure, no transparency, no imposition of reserves. Hedge funds are lightly regulated," he added.
But a senior US official said that something concrete could come from the summit.
"There is much broader agreement than may at first appear," he said, speaking on condition of anonymity.
"I think it is our view that all financial products as well as financial institutions should receive appropriate regulation, appropriate oversight," he said.
A senior European diplomat said decisions could be taken in particular on the hitherto unregulated market for CDS's, which were at the core of the near-collapse of world-leading insurer AIG in September.
Even before the crisis broke Washington and the European Union were working together on instituting better oversight.
"But how far are they (US authorities) willing to go, is not known ... there is sympathy to strengthen supervision and regulation but no decision will be taken right away," said Bryant.
In any case there is little likelihood that Washington will agree to a global financial regulator that will govern US institutions, like the International Monetary Fund.
"This summit and this process is not about discarding market principles or moving to a single global regulator," said the US official.
"Indeed, we believe there is little support in Europe or elsewhere for empowering a single global authority to regulate all of the world's financial markets."
The United States is likely unwilling to cede its sovereignty over its financial products, markets and institutions, whose regulators at any rate answer to the US Congress and not the president.
The US sees the IMF continuing in its official role of helping countries strengthen their economic oversight and managing in crises.
"The IMF could have a useful role in prevention of financial risks, as a research arm, and could inform countries of some kinds of financial risks," said an expert familiar with the issue.
Speculation swirled over the outcome of the summit of the G20, which represents 85 percent of the planet's wealth and two-thirds of its population.
The G20 encompasses the Group of Seven countries -- Britain, Canada, France, Germany, Italy, Japan and the United States -- and 12 other countries: Argentina, Australia, Brazil China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey. The 27-nation EU is also a member.
The leaders of the IMF and World Bank will participate in the G20 summit, as will Spain on an exceptional basis.
"What do I expect? A beautiful communique promising to continue international cooperation in order to solve financial crisis," said Peter Morici, an economist at the University of Maryland School.
"Europeans have unrealistic expectations," he told AFP. "Here there is no push for European-style regulation that would lead to 10 percent unemployment and one percent growth rates."