G20 leaders in Toronto have ended their summit meeting with a pledge to reduce government deficits by half by 2013, without stunting economic growth.
Host Prime Minister Stephen Harper, of Canada, said government debt, as a proportion of the economy, "should be at least stabilised or on a downward trend by 2016".
But he said all leaders recognised that fiscal consolidation is not an end in itself.
Mr Harper also said proposals for a global levy on banks have been dropped. The BBC reports these will be left to individual countries.
The G20 also committed to agree on new minimum levels of capital for banks in time for their next summit in Seoul in November.
US President Barack Obama earlier warned against fast and deep budget cuts, fearing they could damage global growth.
But European members, including Britain, France, and Germany, have already led moves to slash record public deficits, despite opposition from the United States, which has a deficit of $US1.3 trillion.
Former World Bank chief economist and Nobel prize-winner Joseph Stiglitz was one of the few to have predicted the global financial meltdown.
He says the cuts might not have the desired results.
"Almost surely the austerity measures being taken by Germany, by the UK and by other countries in Europe will actually slow the recovery."
Emerging economies such as Argentina and Brazil were worried that budget cuts would hurt their export-dependent economies.
After the meeting, Mr Obama said the agreement was consistent with US policy.
Free float of currencies urged
Leaders from the G20 group of nations have called on the world's emerging economies to allow their currencies to float more freely.
The G20 summit wants a balance in world trade and believes Asian currencies in particular are deliberately undervalued.
A weak currency makes a country's exports cheaper, which critics say gives them an artificial trade advantage.
Much of the focus is on China, which has a huge current account surplus.