The G20 today agreed to pledge more than $1 trillion in emergency aid to poor nations struggling through the worst global downturn since the Great Depression. The group represents twenty of the world's largest economies, which together make up about 85% of global economic output. Leaders met in London Thursday and will meet again in New York this September.

Specifically, the lending power of the International Monetary Fund was boosted to around $750 billion while the IMF's reserve currency, known as special drawing rights (SDRs), were expanded by about $250 billion.

“We have reached a new consensus that we take global actions together to deal with the problems we face,” U.K. Prime Minister Gordon Brown told reporters after hosting the talks. “There was substantial agreement on the need for us to do whatever is necessary to return to growth.”

President Obama, in an effort to show unity, said today that all nations have contributed about $2 trillion in fiscal measures.

On the regulatory side, leaders plan to implement a new Financial Stability Board to bring together regulators and work with the IMF to provide early warnings of potential threats. Regulatory systems will be changed in order to better monitor systemic threats to the global system. New rules will be put in place regarding the amount of leverage financial firms can take on their positions, and banks are likely to be required to increase their reserve balances (in percentage terms) as their portfolio of loans expands. The current Basel II regulations require that banks keep about 8% in reserve.

Systemically important Hedge funds will be subjected to greater regulation and oversight as will all key financial instruments and markets, the G-20 said. The pact marks a narrowing of differences after German Chancellor Angela Merkel and French President Nicolas Sarkozy entered the talks demanding that U.K. Prime Minister Gordon Brown and President Barack Obama endorse a more detailed response to the crisis than that initially planned.

“We never thought we would find an agreement this large,” Sarkozy said today. Merkel called the agreement a “victory for common sense.”

Nobel laureate Joseph Stiglitz, a professor at Columbia University, said in an interview while the “devil is in the details” of how new rules will be implemented, the G-20 had made a “major step forward” in saying markets should be subjected to greater state control.

Principles will also be introduced on pay and bonuses to create “sustainable compensation schemes.” Accounting-standard setters were told to improve valuation methods, while credit-rating companies will be forced to meet a code of good practice.