The leaders of the G20 are meeting in Toronto (Canada) at the end of June. This is the fourth in a series of summits after the collapse of Lehman Brothers, organized with the original objective of building a stronger supervisory framework for the future financial sector.

Given our experience in the previous three, there is not much to expect from our leaders, and by the end of June the world will continue moving at two different speeds: the fast pace of the US regulatory reform versus the lack of coordination and inaction of European leaders.

One year ago in London, the G20 members defined the agenda for a worldwide regulatory reform. The pillars of the new era of financial regulation would be new regulations for systemically important financial institutions - including hedge funds; oversight and registration of credit rating agencies; the end of bank secrecy; tough new principles on pay and compensation; reduced reliance on complex and inappropriately risky derivatives; improved accounting standards; and impose regulation to prevent excessive leverage.

New rules required coordination, as leaders realized that, unless all countries move in the same direction, economic agents would take advantages of differences in legal regimes, as the crisis had just shown. Those initial, well-intentioned objectives have now been forgotten.

Where do we stand as the new summit is about to begin? Impressively, the US has now produced in record time the most radical regulatory reform since the Securities and Exchange Act of 1933.

Already in December 2009 (only seven months after the London summit), the House of Representatives passed by a partisan vote of 223 to 202 the Wall Street Reform and Consumer Protection Act of 2009, which has been amended and approved by the Senate just a few days ago.

The "Wall Street Act" corrects the failures that led to the 2008 crisis. In particular, it imposes shareholders approval of executive compensation ("say on pay"); thoroughly regulates over-the-counter derivatives; imposes for the first time in history the participation of consumers in the control of financial institutions; makes registration of hedge funds mandatory; regulates rating agencies; and strengthens investor protection.

What about the European countries? Well, in the old continent ideas are not that clear.

France and Germany have made the regulation of hedge funds and private equity their primary objective, while the UK naturally opposes it. The European Parliament is about to discuss the Alternative Investment Fund Management Directive proposal, which basically wipes out hedge funds and private equity firms from Europe. There have also been some important agreements with "tax havens" such as Luxembourg and Switzerland against bank secrecy. And that's about all.

Europe has missed the amazing opportunity that the crisis gave it to become the financial center of the world, after the failure of what President Sarkozy called "Anglosaxon capitalism."

By the time Europe cleans up the mess, the United States will have established their dominance in financial markets again.

(The author is professor of finance at IMD. The views are his own. Shanghai Daily condensed the article.)