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WASHINGTON (Reuters) � The International Monetary Fund has called for a new world system to dismantle troubled financial institutions and a levy on banks to pay for it.

The IMF's statement, released on Sunday, comes ahead of meetings here this week among fund officials, the World Bank and leading nations' finance officials. It urges better international regulatory cooperation and stronger supervision.

Two years after the peak of the worst global financial crisis in generations, the IMF is seeking to keep momentum going for substantive cross-border financial reforms.

"Although important steps have been taken like Basel III ... much more remains to be done," said Jose Vinals, a senior executive at the fund. "We need to work together."

The Basel III accord on bank capital standards was finalized weeks ago. Earlier this year, the United States approved sweeping bank and Wall Street reforms. European Union nations have been moving along on reforms of their own.

After massive taxpayer-financed bailouts in the last crisis, one of the toughest aspects of the two-year-old push for a regulatory overhaul has been finding a way to ensure that taxpayers don't get stuck with the bill for the next crisis.

"It would be unrealistic to have an international fund" dedicated to paying for the dissolution of financial firms that run into trouble, Vinals told reporters at a briefing.

"National regimes is what we were envisioning," he said, adding that a nation would not have to impose a bank levy to participate in some sort of global resolution regime.

He said that the IMF's bank levy proposal was "still on the table." The fund initially proposed it in April, drawing statements of opposition from the banking industry.

BROWN BROACHED LEVY

Former British Prime Minister Gordon Brown broached the idea of a levy in late 2009. Support for it has varied since.

U.S. President Barack Obama has proposed a $90 billion tax on big banks to recoup taxpayer bailout expenditures.

The U.S. Congress in June dropped a bank levy from the final version of legislation to reshape bank regulation, but Democratic Representative Barney Frank wants to revive it.

Frank is chairman of a key congressional committee that oversees banks. Like other members of the U.S. House of Representatives, Frank faces a reelection test on November 2. He may or may not return to the committee chairmanship.

The EU aims to reach a deal on a bank tax by the end of the year, the bloc's presidency said last week.

Didier Reynders, finance minister for Belgium, which holds the EU presidency, said the EU was working on measures to ensure that banks and not taxpayers pay for bailouts in future. The bloc's executive European Commission is studying a levy.

"We will try to reach an agreement on that by the end of the year," Reynders told a Eurofi symposium on EU regulation.

The IMF released a "staff position note" calling for more global coordination on oversight, stronger supervision, an international resolution regime for troubled firms and possibly "a levy whose receipts could either accumulate in a resolution fund or be paid into general revenue ...

"Such a levy ... can be imposed on all financial institutions, with the rate initially flat but refined over time to reflect institutions' riskiness and contributions to systemic risk," the note said.

(Editing by Bernard Orr)

ATHENS (Reuters) � China pledged on Sunday to support a stable euro and not reduce its holdings of European government bonds in an effort to deflect criticism of its foreign exchange policy ahead of an EU-China summit this week.

China, at loggerheads with the United States over the yuan and likely to face similar complaints during his tour of European countries this week, emphasized its willingness to cooperate with the 27-nation EU..

"I have made clear that China supports a stable euro," Chinese Premier Wen Jiabao said during a visit to Greece at the start of a one-week European tour. "We will not reduce the holdings of European bonds in our foreign exchange portfolio," he added.

Wen, who offered on Saturday to buy Greek government bonds when debt-laden Athens resumes issuing, said on Sunday he was glad Greece was starting to emerge from the shadows of its debt crisis.

China has said it needs to diversify its foreign currency holdings and has bought Spanish government bonds. Chinese state entities have been generally conservative about investing in foreign financial markets and the Chinese government faces domestic political criticism over losses they incurred during the global financial crisis.

FREEING THE YUAN

Policy moves by the Chinese government to free the yuan from a dollar peg will help the Chinese currency rise, Dominique Strauss-Kahn, the head of the IMF said on Saturday.

France has not held secret talks with China as part of an effort to heighten coordination of exchange rates, a French presidential palace source said on Saturday, dismissing an earlier Financial Times report.

The London-based paper said talks had been going on for a year and that Paris wanted to open the debate during the G20, rather than push a particular view, and was not proposing fixing rates.

Wen and his Greek counterpart George Papandreou said in a joint statement the world's nations need to coordinate economic policies for global recovery to find a sure footing..

"Global economic recovery is a journey with many turns and a full exit from it requires joint efforts," Wen said on Sunday. He made no comments on the yuan. On Saturday he said he was willing to work with the EU to confront the financial crisis and reform the international financial system.

Ahead of a China-EU summit on Oct 6, Wen urged the block to recognize China as a market economy, a status that would make it less vulnerable to anti-dumping charges under WTO rules.

In exchange, China offered to boost copyright protection and widen bilateral trade. "China commits to improving investment environment, to intensify copyright protection, widen bilateral trade and upgrade technology cooperation," he said in his speech in Greece's parliament through an interpreter.

But despite its growth, China remains an emerging economy, Wen said. "The basic reality of China, such as a huge population, a weak economic base, and unbalanced growth has not radically changed," Wen told parliament.

"Per capita GDP is just one eighth of Greece's and the percentage of population below the poverty line is three times that of Greece. China continues to be an emerging country."

He said he was confident Greece was on track to exit a debt crisis that shook the euro and said China wanted to boost cooperation with Greece, which faces its worst recession in decades.

Bilateral trade volume should double to $8 billion euros a year in 2015 with Greek traditional exports, such as olive oil, increasing.

"A few months ago, (we) signed an agreement to purchase 290 tons of Greek olive oil," Wen said. "Last night, for the first time in my life, I dipped a bite of bread in olive oil. It tasted very good."

(Writing by Harry Papachristou; Editing by Jon Loades-Carter)

YALTA, Ukraine (Reuters) � Policy moves by the Chinese government to free the yuan from a dollar peg will help the Chinese currency rise, Dominique Strauss-Kahn, the head of the International Monetary Fund, said on Saturday.

"I am confident that the new policy of the Chinese authorities will lead to the revaluation of the yuan," Strauss-Kahn said during a conference in the Black Sea resort town.

Finance Ministers from the Group of Seven major industrialized nations will meet informally on the sidelines of an IMF meeting in Washington on October 8, which will focus on potential currency depreciations by some countries who may seek to increase exports.

China's policy of keeping the yuan artificially weak has drawn criticism that Beijing is maintaining an artificial advantage in international trade at cost of jobs in consumer countries.

Strauss Kahn warned against efforts by other countries to hide their own economic problems behind China's currency policy.

"This kind of policy is in their own interests. The revaluation of the renminbi should not be used (by other governments) as a curtain to hide problems in their own country. It is always easy to have scapegoats"

(Reporting by Olzhas Auyezov; Writing by Melissa Akin in Moscow; Editing by Sugita Katyal)