Medvedev in Berlin

Merkel called for an overhaul of the financial markets on Tuesday, March 31, after meeting with Medvedev in the German capital.

"The world is standing at a crossroads," the chancellor told reporters at a joint press conference following the meeting. "Financial markets need to change in such a way that such crises are not repeated."

Medvedev supported his German counterpart, adding that the G20 meeting would be the first of many meetings towards developing a new global financial system.

"The G20 format does not have to provide the definitive solution," he said. "It should be the start of a new financial market design."

The two leaders also warned of protectionist policies implemented by some governments in response to the financial crisis.

Merkel said the G20 meeting must include a clear statement against protectionism.

Russia's ambitious financial reform plans

Ahead of Thursday's summit in London, Russia has come up with an ambitious plan to overhaul the entire global financial order. Medvedev even said the international community should have a say when the world's richest countries make decisions with global implications, as in the US mortgage crisis.

But analysts doubt Russia's plans will get many backers among Group of 20 countries, be they established players or rising powerhouses such as Brazil, India and China.

Economists say that while some of Russia's ideas -- such as a world currency -- are currently unfeasible, others it may offer will fail more due to Moscow's lack of diplomatic heft.

Though Russia is a member of the Group of Eight industrial powers, it is still not among the 153 members of the World Trade Organization and is side-lined at meetings of Group of Seven finance ministers.

While Russia is among the top world energy producers and an undoubted political heavyweight, its economy is dwarfed by the United States and European Union.

Amid reports that the G20 meeting may be devoted to crisis management rather than long-term reform, Britain's Financial Times has reported that the British Foreign Office has already relegated Russia to the rank of second-division player.

Russia appears reluctant to accept this and has been talking up its reform plans for weeks.

Germany offers to mediate in gas dispute

Merkel also offered Germany's services on Tuesday in resolving the dispute over gas between Russia, and Ukraine, which has made a deal to modernize its pipeline network with the European Union last month.

The chancellor said she would raise the issue with the European Commission despite Russia's objection to the agreement.

Russia was angry at being left out of talks over the deal, calling the agreement an "unfriendly act." Ukraine, however, has said its pipeline overhaul was not aimed at Russia. Ukraine is a major transit country for Russian energy headed to Europe.

Merkel called on both parties not to let the situation escalate out of control.

A gas dispute between Russia and Ukraine in January left some EU nations without gas for more than a week.