The Davos forum opened its first day of discussions on Wednesday with the focus on how to improve the regulation of the financial sector to avoid future crisis and whether global economy could recover sustainably.

While there is wide consensus that the global financial system needs to be better regulated, participants at the meeting differed on what changes should be made, with some particularly warning against overregulating.

"We are in danger of attacking the most visible problems instead of doing what we need to do," said Raghuram Rajan, an expert from the University of Chicago School of Business.

"We could overregulate and go too far and whittle away too much, " Rajan told a session on the so-called "New Normal" of Global Growth.

"We need good regulation, better regulation but not more regulation," said Lord Levene, chairman of British bank Lloyd's in a separate session.

While some people were against the Obama Administration's plan to break up banks that are "too big to fail", others support it.

The new financial sector reforms and regulations proposed by the Obama Administration "are going in the right direction," said Nouriel Roubini, chairman of Roubini Global Economics Monitor, USA.

"Financial institutions that are too big to fail should be broken up," he said.

The panelists also offered their outlook on the global economy. "It will be a U-shaped recovery...and there is a risk of a double- dip recession," said Roubini.

He noted that emerging market economies would do better than advanced economies. But the model of export-led growth in emerging economies such as China is now challenged by the fact that countries like the United States are importing less.

China's GDP will exceed that of Japan in 2010, noted Heizo Takenaka, director of the Global Security Research Institute at Keio University in Japan.

He predicted that the recovery of the global economy will be W- shaped, with China and other emerging economies key contributors to the rebound in growth.

Dennis Nally, chairman of PricewaterhouseCoopers (PwC) stressed that global cooperation was very important for resolving the current economic problems. "If we don't strive for a global solution, we will go backward and not forward," he said.

But others noted that multilateral coordination of financial reforms and the rebalancing of the global economy will be hard to achieve.

"Getting national solutions is difficult enough; getting multinational solutions is almost impossible," said David Rubenstein, managing director of the Carlyle Group in the Untied States.

More than 2,500 leaders from over 90 countries, representing businesses, governments, civil society, academia and the media, are attending the five-day annual meeting.