World leaders gathering at next week’s G20 summit need to co-ordinate action to rid bank balance sheets of toxic assets or risk a rise in financial protectionism, Australia’s prime minister has warned.

Kevin Rudd with Hillary Clinton, US secretary of state, during the Australian leader’s visit to Washington

In an interview with the Financial Times, Kevin Rudd praised this week’s release by Tim Geithner, US Treasury secretary, of a plan to set up public-private funds to buy toxic assets as a “welcome return of US economic leadership”.