French President Nicolas Sarkozy and Germany's Chancellor Angela Merkel on Thursday warned the US and the banking industry not to try to thwart European efforts to tighten regulation of global finance later this year.

The French and German leaders issued a blunt warning to the incoming administration of Barack Obama that Europe would set the agenda for the G20 summit of leading and emerging economies in London in April.

"In the 21st century there is no longer only one country that says what we should do and think," Mr Sarkozy told a conference in Paris on capitalism and ethics. "We do not accept the status quo, we won't accept immobility, we will not accept any return to a single way of thought," he added.

Ms Merkel told the conference that she would "react very strongly" if the financial community tried to block government efforts to tighten regulation.

The German chancellor made clear her desire that the new world financial order born out of the economic crisis should look like Germany's cherished "social market"

Ms Merkel also proposed the creation of "economic council" at the United Nations, akin to the security council. "We need new rules for the markets, but that will not be enough," she explained.

She called for the UN to draw up a "charter for reasonable long-term development" which could act as a yardstick for government policies.