Tokyo  - Japan agreed to provide 2 billion dollars to launch a fund with the World Bank to help recapitalize struggling financial institutions, especially in developing nations.

The World Bank was expected to contribute 1 billion dollars to the fund, according to a statement released Friday at the Group of 20 (G20) summit in Washington.

The leaders of 20 developed and emerging economies gathered in Washington for a two-day summit to discuss ways to fight the global financial crisis.

"This initiative to recapitalize banks is similar to the domestic measures we are taking to stimulate the Japanese economy, especially with regard to supporting small and medium-sized enterprises," Japanese Finance Minister Shoichi Nakagawa said in the statement.

Ahead of the summit, Japanese Prime Minister Taro Aso called for reforming the International Monetary Fund (IMF) and supporting the US dollar's role as a key currency, Japanese media reports said.

Aso said Japan was to lend up to 100 billion dollars to the IMF to help emerging economies.

An internationally coordinated fiscal and monetary policy was necessary to fight the ongoing financial crisis, Aso was quoted as telling the British Prime Minister Gordon Brown at their meeting before the G20 summit, which was called as world stock markets have sharply fallen, credit has dried up and the global economy has taken a sharp downturn.

They agreed that the IMF's functions should be strengthened so it could provide early warnings about financial disruptions. (dpa)