LONDON (Bloomberg) – UK Chancellor of the Exchequer Alistair Darling called for the Group of 20 to draw up a "blacklist" of countries whose regulatory systems pose a risk to the world's financial system.

The finance minister said Britain wants to extend the G-20's effort to set standards on taxation and bank rules to cover countries that have a poor record overseeing institutions and allow wealthy individuals to hide cash.

"Just as we have been tackling tax havens, we also need to go after those countries that offer regulatory havens where mainstream regulators here and in America and in Europe can't get the information they need," Darling said in an interview on Bloomberg Television yesterday. "If you don't comply you get until March next year then you will be blacklisted." The measures would target countries such as Panama, the Dominican Republic, Turks and Caicos Islands and the banks and hedge funds that operate there. They are on an Organisation of Economic Cooperation & Development list of countries that haven't implemented international tax standards.

Prime Minister Gordon Brown's government is aiming to gather support from the G-20 nations for tighter bank regulations and curbs on executive pay to prevent the financial services industry from repeating the market turmoil that triggered the global recession.

Brown and Darling meet G-20 leaders in Pittsburgh today and will urge colleagues to take up the issue at its next meeting in November. They also want the group to offer help to nations that intend to improve their regulatory structures.

"What we are saying to these companies is, 'Look, you live in the same world as the rest of us; you enjoy the privileges when you travel that everybody else does," Darling said. "You can't shelter behind this veil of secrecy where we can't get the information we need to understand the risks to which some of our institutions may be exposed." Darling also said the UK a should take a "sensible" approach to reducing the Treasury's budget deficit, signaling he's not planning major reductions in public spending in his pre-budget report due by the end of this year.

"You have to be measured about it," Darling said. "You have to make sure you reduce your spending to get your borrowing down, but you also do it in a way that doesn't hurt people and doesn't damage the prospects of the country in the future."

Britain extended £1.4 trillion ($2.3 trillion) of support to the economy and bailed out institutions including Royal Bank of Scotland Group plc. and Lloyds Banking Group plc.

The Treasury estimates the rescue may cost taxpayers £50 billion.

Darling wants Britain Financial Services Authority to have reciprocal access to other countries' regulators and information that would help authorities assess where risks to UK institutions may lie.

Darling said he was hopeful the UK would secure agreement to the proposals, because the "whole climate" of thinking on regulation has changed over since the financial crisis began.

Officials at the international Financial Stability Board have been working on the plans, lead by the British, French and German governments.