Pittsburgh, Sep 25 (DPA) World leaders of the Group of 20 (G20) agreed Friday that the bloc of advanced and emerging countries will permanently replace the long-standing Group of Eight (G8) as the main body to discuss economic issues.

The decision comes as the G20 leaders began a day of talks in Pittsburgh, Pennsylvania, hosted by US President Barack Obama, to assess the state of the world economy, agree to far-reaching financial regulatory reforms and consider financing efforts to combat climate change.

The leaders are set to announce a compromise that would impose far-reaching curbs on bank bonuses, with possible penalties for banks that don't comply with the new rules, according to German government officials. This has been a key demand of the European Union.

Drawing on the lessons of the year's financial crisis, the leaders are also expected to pledge new international rules on capital standards for banks, in order to stop financial firms from holding too few funds to survive a downturn.

Countries that haven't adopted the Basel II rules on capital requirements, including the US, will pledge to do so by 2011. The Basel II accord was agreed upon earlier this decade and has been in place in most European countries since 2007. The US is also pushing for the rules to be strengthened further in coming years.

Before the day's talks even began, leaders reached what the White House called an 'historic agreement' to secure the G20's future as a place for discussions on the global economy. The bloc shot to prominence last year as the world's worst recession in decades forced leaders to broaden their cooperation beyond just industrial nations.

The commitment represents a major victory for emerging economic giants like India, China and Brazil. The G20 countries together make up about four-fifths of global economic output.

'It is very difficult in the world of today for you to continue with G8 only without taking in account the importance of Brazil, China, India, many in the world economy,' Brazilian President Luiz Inacio Lula da Silva told the US broadcaster PBS Thursday.