The most urgent task facing world leaders meeting at next week's G20 London summit is to repair bank balance sheets to restore private credit flows, said Kevin Rudd, Australia's prime minister.

Mr Rudd, who is leading efforts to restructure the International Monetary Fund, said that failure to come up with a co-ordinated global response to reduce toxic assets would lead to further financial protectionism, which he called the “21st century equivalent of the Smoot-Hawley Act [the 1930 US bill that erected tariff barriers and fuelled the Depression]”.

Last week the World Bank cited 73 instances of protectionism since the G20 last met in Washington in November, in spite of the fact that leaders pledged to restart the Doha Round at that summit. Today the World Trade Organisation is expected to come up with its own list of protectionist acts.