Finance ministers from the world's seven leading economies have called for greater vigilance on hedge funds and for the Chinese government to loosen its control over its currency, the yuan.
In a policy success for Germany's G8 presidency, ministers meeting in the western city of Essen narrowed their differences over hedge funds, worth a total of €1.1 trillion worldwide, which critics say lack transparency and pose a risk to world financial security.
"Given the strong growth of the hedge fund industry and the instruments they trade, we need to be vigilant," said a final statement, noting that hedge funds had "contributed significantly to the efficiency of the financial system".
"Nevertheless, the assessment of potential systemic and operational risks associated with these activities has become more complex and challenging," it said.
Germany bowed to pressure from the US and Britain, where most hedge funds are based, and rowed back from its original proposal of imposing regulations by the end of the year.
Instead the Essen summit has commissioned Gerald Corrigan, a former president of the New York Federal Reserve and an expert on financial market stability, to build up contacts between hedge fund managers and finance ministries.
Bundesbank president Axel Weber talked up the hedge fund agreement, saying that "vigilant means that we are anything other than complacent".
European Central Bank president Jean-Claude Trichet said a code of practice and standards was some way off, but added: "I'm sure that the industry will crystallise on an appropriate concept."
Mr Trichet also addressed growing concerns about "carry trades", a practice of borrowing huge amounts of low-yield currencies to reinvest at a profit elsewhere.
The practice has contributed to the 9 per cent drop in the Japanese yen's value against the euro in the last year, though Mr Trichet said his warning applied to all currency trading.
"We want the markets to be aware of the risks of one-way bets, in particular on the foreign exchange market," he said, "One-way bets in the present circumstances would not be, it seems to us, appropriate. We want the markets to be aware of the risks they contain."
Japan and the US saw off attempts by European G7 members to mention the yen specifically in its final report.
US Treasury Secretary Henry Paulson said a greater problem was posed by China's yuan. Controlled by Chinese authorities, western countries believe the currency is undervalued and gives Chinese exports an unfair competitive advantage in world trade.
Meanwhile German Finance Minister Peer Steinbrück said he would like to see China and Russia invited into an enlarged G7 round.
