Zoellick says G7 should be replaced

The Group of Seven, the premier forum for inter-governmental co-operation among the world's largest industrialised nations, has failed and the world needs new institutions to help it overcome crises such as the current credit crunch, according to the president of the World Bank.

Robert Zoellick, in a speech ahead of the meetings of the International Monetary Fund and the World Bank later this week, said that emerging economies such as Brazil, China, Russia and Saudi Arabia should be included if the international community is able to coordinate proper policy responses.

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"The G7 [the US, Japan, Germany, France, the UK, Italy and Canada] is not working," he said. "We need a better group for a different time."

He went on: "It should be numberless, flexible, and over time, it could evolve. Others may be added, especially if their rising influence is matched by a willingness to help shoulder responsibilities... The response to these crises will have to be larger and global."

His comments echoed calls by the French president Nicolas Sarkozy and came as battered financial markets plunged once again, on disappointment that the world's central banks have not yet launched the co-ordinated interest rate cuts for which many market players have been calling.