SAO PAULO, Brazil —  Brazil's president on Saturday demanded that major reforms of the international financial system include strong input from large emerging nations and said the collapse of modern banking structures is victimizing the world's poor.

Those who have the least stand to lose the most from a credit crunch that has slammed businesses from Brazil to China, President Luiz Inacio Lula da Silva said at a meeting of finance ministers and central bank presidents from 20 of the world's wealthy and emerging economies ahead of a Nov. 15 summit in Washington.

The Group of 20 nations must "formulate proposals for a substantial change of the world's financial architecture," Silva said. "This system collapsed like a house of cards that dragged down with it the dogmatic faith in the principles of nonintervention by the state in the economy."

In closed-door talks, leaders also discussed ways for nations to boost government spending to counter a global slowdown that could lead trade to contract next year for the first time since 1982, said World Bank President Robert Zoellick.

Chinese officials in particular discussed a strong fiscal expansion, Zoellick said.

Millions of people in developing nations are suffering from a worldwide credit crunch that started in the U.S. and Europe and has spread to rapidly growing emerging market nations, Silva said. In Brazil, farmers are now are planting less soy, and corporations are cutting output of iron ore, steel, automobiles and other products.

After lending by rattled U.S. and European banks slowed, foreign investors sold off emerging market assets, forcing extreme measures by governments including Brazil's to prop up sagging currencies and provide credit lines to companies.

"Foreign investment funds are withdrawing their assets in the capital markets of emerging countries to cover the losses they sustained in advanced markets," Silva said. "This loss of funds affects balance of payments and makes it difficult for companies to finance themselves."

France has proposed incorporating emerging economies into the exclusive G-8 club of industrialized nations. Brazilian Finance Minister Guido Mantega suggested that group should include as many as 15 countries, but didn't specify which emerging-market nations besides Brazil, Russia, India and China should be allowed to join.

The International Monetary Fund could also become the world's financial watchdog, with increased powers to curb financial crises with more money to aid troubled economies, European presidents suggested Friday.

But Brazil and other emerging-market nations have long complained their representation in the IMF and World Bank is insufficient, and Silva on Saturday said the G-20 is better positioned to forge new international financial regulations, because it more broadly represents both rich and developing countries.

"We need a new, more open and participative governance," said Silva, a former union leader who is Brazil's first working class president. "This is not the moment for narrow-minded nationalism or of individual solutions."

Washington supports giving Brazil and other developing nations a significant role, said David McCormick, the U.S. Treasury Department's undersecretary for international affairs.

Silva "presented a constructive overview of the challenges we face and the need for developed and developing nations to work together in addressing those challenges," McCormick said in a statement.

Large emerging economies will inevitably form part of whatever group wins the task of rebuilding and strengthening the financial system, Zoellick said. But he warned that extremely poor nations whose economies are most vulnerable, including many in Africa, also need a voice because their citizens will be most hurt by the current turmoil.

"We need to make sure that the financial crisis doesn't become a human crisis," Zoellick said.

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Associated Press Writer Stan Lehman contributed to this report from Sao Paulo.

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