Finance ministers from the eurozone countries are due to meet later yesterday to seek a common front on reforming the global financial system in the wake of the financial crisis.

As a regular practice, they would be joined by their counterparts from other European Union (EU) member states today.

A French official, whose country holds the EU rotating presidency, said the monthly gatherings were meant to prepare for an informal EU summit later this week where leaders would hammer out a common position for the upcoming global financial talks in Washington on Nov. 15.

"The ministers of finance would be preparing for these two summits," the official said.

In a document prepared for discussion by EU finance ministers, the French presidency has proposed the reform of international financial institutions, notably the International Monetary Fund (IMF) and the World Bank, to improve supervision and monitoring of global financial markets.

Several EU leaders such as British Prime Minister Gordon Brown and French President Nicolas Sarkozy have called for a new Bretton Woods system in the global financial reform push, supporting an overhaul of the IMF and the World Bank, which are Bretton Woods institutions set up after World War II.

The document says emerging economies led by China and India should be given more say in the Group of Eight (G8) industrialized countries, a rich countries' club which dominates the IMF and other international financial institutions.

"Further reform of the G8 should be considered to make this group more inclusive of emerging countries," says the document, adding that "further association of emerging and developing countries is essential" to increase legitimacy of institutions like the IMF.

With tougher financial regulation at the core of the EU's proposals, the document also urges the setting up of supervisory colleges to oversee cross-border banks.

"Supervisory colleges should be rapidly established for all significant cross-border firms to ensure effective oversight," the document says.

It says risky practices and behavior should be avoided, calling on the global summit to draw up codes of conduct to address "incentives to excessive risk-taking in the financial industry, including through compensation schemes."

Credit rating agencies, blamed for being too slow to warn about the risks in the US sub-prime mortgage market, where the current financial crisis originated, should also be made to register, the document adds.

More than a month after the financial storm hit Europe, it has deepened in the EU, with several Eastern European countries like Hungary under severe stress and forced to seek help from the EU and the IMF.

EU finance ministers are expected to agree on an urgent financial assistance package to Hungary, amounting to 6.5 billion euros (US$8.3 billion).

The EU support will be granted in conjunction with a loan from the IMF and the World Bank worth 20 billion euros (US$26 billion).

Although the European Commission proposed last week that the ceiling for EU financial assistance to non-euro member states experiencing difficulties with balances of payments be doubled to 25 billion euros (US$32 billion), the French official said EU finance ministers were unlikely to make any decision on the issue since the European Parliament has to be consulted first.

The finance ministers meet as the financial crisis looks ready to plunge the European economy into recession.

In an economic forecast today, the Commission said the eurozone economy is headed toward a recession, with the EU likely to follow suit.

Due to the ongoing financial crisis, the worst in decades, both the eurozone and the EU economy are expected to grind to a halt in2009 and only start picking up in 2010.

In 2009, the eurozone economy will grow at a mere 0.1 percent before recovering to 0.9 percent in 2010, while the EU economy will grow at 0.2 percent this year before hitting 1.1 percent in 2010, according to the forecast.

Among large EU member states, Britain, a big victim of the financial crisis, is facing a deep recession, with its economy set to contract by 1.0 percent in 2009. Germany, France and Italy would all see zero growth.

The Commission said last week it will propose a recovery package later this month to save the real economy from the impact of the financial crisis.

The French official said EU finance ministers were unlikely to work on the stimulus plan this time around.