GORDON BROWN, the Chancellor of the Exchequer, called on his fellow finance ministers from the Group of Seven to agree to a "yellow card" system of public warnings for countries that fail to adopt measures recommended by the International Monetary Fund.

The Chancellor, hosting a two-day G7 meeting yesterday and today, said: "There must be some recourse for the international institutions if their advice is persistently ignored."

The IMF has been criticised for not drawing attention earlier to Asia's problems, but its defence is that it had privately been advising governments in the affected countries to alter course.

Mr Brown's proposal got a cautious welcome from the IMF itself. Michel Camdessus, the Fund's managing director, said: "I do not need to emphasise how important it is to know exactly when the referee has shown a yellow card and how many yellow cards are permitted."

The finance ministers, meeting in London, discussed lessons to be drawn from the Asian financial crisis and agreed a series of recommendations to be put to the G8 heads of government meeting in Birmingham next weekend.

As well as the public warnings proposal, the finance ministers agreed there was a need for greater openness in economic policy, better co-ordination in order to improve what has become known as the "international financial architecture", and closer involvement of private sector lenders in bailing countries out of financial crises.

The IMF has been asked to draw up a code of conduct for monetary and financial policies and a code for accounting and corporate governance standards that its member countries should sign up to. It has already started work on a code for government fiscal policies. Member countries would be asked to adopt these codes.

Mr Brown said the state of the Japanese economy, and the new stimulus package, would be a central issue in the G7 discussions. "It is in everybody's interest that the Japanese economy recovers quickly," he said.

Earlier G7 meetings openly criticised the Japanese government for not doing enough. Yesterday Robert Rubin, the US Treasury Secretary, welcomed the measures but urged further progress on structural economic reforms.

Mr Rubin and Hikaru Matsunaga, Japan's finance minister, repeated their earlier commitment to co-operate in the foreign exchange markets and expressed concern that the yen should not be "excessively" weak.

This helped take the yen slightly higher on the foreign exchanges. The pound weakened against the dollar yesterday, ending at 1.637. It closed at 2.895 against the German mark.

The Chancellor, just back from a swift tour of South East Asia, was also keen to emphasise the importance of tackling the social problems triggered by the financial crisis. "They have got to be addressed now, with world support," he said.

But Mr Brown added that political reform was also needed. Referring to Indonesia, where riots have alarmed the financial markets, he said: "The economic reform they agree is necessary must be accompanied by ... political reform with respect to individual rights and by social reform as well."

He defended the IMF against accusations that its programmes had triggered social unrest, saying failure to implement the fund's structural reform programmes would make the poor even greater victims of the crisis.

Mr Camdessus too said it was essential to make sure that the poorest people shared in the benefits of economic globalisation.

The continuing economic difficulties in Japan remain a cause for concern, said the European monetary affairs commissioner, Yves Thibault de Silguy.

He told a news conference the recent stimulus package announced by the Japanese government was impressive and a step in the right direction, but a full and rapid implementation of the package was vital. More needed to be done to boost the Japanese economy, including implementing tax cuts.