German Chancellor Angela Merkel listens to UK Prime Minister Gordon Brown, in Berlin on Sunday Feb 22, 2009.

European leaders in Berlin on Sunday, agreed on the need to regulate all financial markets including hedge funds. They also plan to impose new restrictions on tax havens.

Ahead of the Group of 20 summit of advanced and emerging economies in London in early April, the leaders called for new sanctions to punish “uncooperative” jurisdictions and tax havens, which member states plan to name in the coming weeks.

German Chancellor Angela Merkel highlighted that leaders faced an "extraordinary international crisis".

The heads of government and finance ministers of Germany, France, the UK, Italy, the Netherlands, Czech Republic and Luxembourg (the Prime Minister who is also Finance Minister, is head of the Eurogroup of Eurozone finance ministers), as well as the president of the European Commission and central bankers, met to agree on a common European position for the G20 summit, which President Barack Obama, is due to attend.

In a joint statement, the leaders endorsed a plan to create a comprehensive regulatory framework that covers“all financial markets, products and participants – including hedge funds and other private pools of capital which may pose a systemic risk”.

Both France and Germany, have pushed for comprehensive regulatory financial reform.

 “We’re not talking about superficial measures. We’re not talking about transitional measures. We’re talking about structural measures that need to be taken,” said Nicolas Sarkozy, France’s president.

Chancellor Merkel said EU leaders had gone further than they had in the past by calling for sanctions to crack down on uncooperative financial jurisdictions, including tax havens, a list of which would be drawn up by April 2nd. Germany is particularly irked by the Alpine tax haven of Liechtenstein, which has for decades facilitated German tax evaders.

Sarkozy said participants at the London summit would bear a "historical responsibility" to reform the global system.

German Chancellor Angela Merkel, French President Nicolas Sarkozy and Italian Prime Minister Silvio Berlusconi, in Berlin on Sunday Feb 22, 2009.

"We have to succeed and we cannot accept that anything or anyone gets in the way of that summit. If we fail there will be no safety net," he said.

Czech Prime Minister Mirek Topolanek, whose country currently holds the EU's, expressed concern at what he saw as divisions between Europe's major economies.

"If I put it very tenderly, the divergence in opinions was rather big,"he is reported to have said.

"It was obvious that the four countries representing the EU in the G20 [France, Germany, Britain, Italy] do not have the same opinion on a number of issues."  

UK Prime Minister Gordon Brown said there was a need to create an economy that is based on the "soundest principles", saying the world needed a "global new deal".