Dominique Strauss-Kahn, the IMF’s managing director, welcomed Poland’s announcement. “I am very pleased by this positive response from Poland to the invitation I extended to strongly performing economies to use this new instrument to bolster international confidence“.

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I’m booking this guy to spin my eulogy.

Financial leaders, including Chancellor Alistair Darling, were stunned by the bankers’ lack of remorse in the face of the credit crunch.

Instead of expressing regret for the sub-prime mess the bankers proceeded to lecture the G7 on the need to keep credit markets open, through central bank actions, and to avoid any new regulation.

Among the bankers present was Barclays’ Bob Diamond, Britain’s highest paid executive, who did little to enhance his reputation among officials.

The bankers had been invited to join the G7 for an unprecedented summit on what the International Monetary Fund describes as the worst financial crisis since the Great Depression.

They have been warned by Donald Kohn, vice- chairman-of America’s Federal Reserve that the crunch is not over. ‘The turmoil has not settled down yet,’ Kohn said. There is still a fragile situation.’

The tide among regulators is moving against the banks. ‘We need a better balance between market disruption and regulation,’ argued Tim Geithner, the New York Fed official who forged the rescue-for Bear Stearns in February.

‘I don’t believe anyone looking at the system today would think we have got the balance right.’

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The meeting comes a day after the Bank of England announced a quarter-point rate cut that financial players fear will do little or nothing to alleviate the strains in the financial markets and the broader economy.

Chancellor Alistair Darling and colleagues meeting in Washington will attempt to agree the terms of a global programme, swapping billions of dollars of sub-prime tainted debt securities for more marketable liquid assets.

The hope is this will help unfreeze the banking system, where firms are hoarding cash rather than lending to each other.

In a speech today, Darling will urge finance ministers to ‘take action to support the global economy in the short term,’ warning the meetings come at a ‘critical time’.

The International Monetary Fund has warned America’s property meltdown has triggered the worst financial and economic crisis since the Great Depression

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The plan, which would broadly expand the Federal Reserve’s powers, comes as concerns about the housing crisis and its fallout in the financial system continues to fuel calls for change in Washington. The Paulson changes, if enacted, would be largely invisible to consumers but would drastically alter how the financial services industry is regulated.

“Government has a responsibility to make sure our financial system is regulated effectively,” Paulson said. “And in this area, we can do a better job.”

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Leading central banks swept into the markets, pledging to pump hundreds of billions of dollars into the disintegrating financial system. Stock markets rallied after the US Federal Reserve, the European Central Bank and the Bank of England joined forces to ease the liquidity crisis afflicting the global banking system.

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The Fed said in a statement in Washington it plans to make up to $200 billion available through weekly auctions. Officials told reporters on condition of anonymity that the program may be increased as needed. The Fed coordinated the effort with central banks in Europe and Canada, which plan to inject up to $45 billion into their banking systems.

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The U.S. currency dropped 2.4 percent this week against the euro, the most since December, after Fed Chairman Ben S. Bernanke said he “will act in a timely manner” to spur growth and cited the weaker currency’s role in improving the trade deficit as a “positive” for the economy. The U.S. Dollar Index, which tracks the currency against six major counterparts, sank to the lowest since its start in 1973.

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“The main reason for the increase was that the oil prices have breached through the 100-dollar mark. This and a weakening dollar, has driven the gold prices higher,” said Gary Yue, a gold dealer at Delta Asia Financial Group.

“Investors are worried about the oil prices and the weak dollar. When the situation is unstable, they invest their money elsewhere and this has boosted the buying interest in gold,” he said.

The precious metal, also being supported by increased jewellery purchases in emerging economic powerhouses China and India, had first smashed its 28 year-old record of 850 dollars an ounce on Wednesday.

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