Saturday's financial summit in Washington will be a good thing in itself: After years of "G-7" and "G-8" meetings, the new "G-20" format will give most of the key emerging economies seats at the world's top table. The summit could be even better if it spurs governments to pass stimulus packages: Already, China has announced a gargantuan infrastructure spending program that should soften a global recession. But the tricky challenge for the summit is to make global finance safer. To understand how headway could be made, it helps to think about finance like car insurance.

Car insurance makes driving possible by pooling the cost of crashes. If I had to pay out of pocket any time I had an accident, I might never get behind the wheel; I would want to have 80 grand in the bank in case I totaled someone's Mercedes. But since the number of expensive cars that get smashed is quite small, I can deal with this risk cheaply by sharing it with other drivers. We all pay $5 weekly into the fund, and suddenly there's no need for vast sums in the bank.

The most famous financial summit, the Bretton Woods gathering of 1944, built upon this principle. Just as uninsured drivers need big savings to prepare car crashes, uninsured nations need big savings to prepare for financial crashes. So the Bretton Woods architects created insurance in the form of the International Monetary Fund. Countries pooled savings they would otherwise have kept in their central banks; when a financial crisis struck, the IMF kitty was used to help afflicted members. The need for countries to hold savings in the form of central bank reserves was wonderfully reduced. Governments could allow their people to keep more of their money — and take it to car showrooms.

It's time for an update of the Bretton Woods plan. The volume of capital flooding through the world's system has increased exponentially, which makes crashes more costly. But the IMF's kitty has not kept up. In 1990, when the stock of cross-border portfolio investment stood at $171 billion, the IMF had $36 billion of lendable resources. Today, with cross-border portfolios at upward of $3 trillion, the IMF has a $201 billion war chest. The challenge has grown by a factor of 18 while the remedy has grown only sixfold. To restore the 1990 status quo, government commitments to the IMF should be tripled.

Because of the IMF's decline, even the best-run nations face unacceptable risks. A decade ago, when a country such as Brazil experienced a crisis, it was possible to blame bad Brazilian policy. But in the past few years, Brazil has done just about everything right, but has still been whiplashed. Capital that flooded into the country during the good years promptly flooded out again because of a freak event abroad: No-doc loans in the United States rear-ended Brazil's economy. Over the past three months, the Brazilian stock market has fallen 37 percent, and the currency is down 30 percent against the dollar.

If we had a bigger IMF, Brazil and similarly hit countries would borrow IMF dollars to replace the ones withdrawn by bankers who crashed their subprime go-karts. But the IMF lacks a sufficient emergency fund. In the short term, this may mean the credit crunch will hit emerging economies harder than it should — and the global recession will be worse than need be. But long-term consequences could be significant.

In the absence of a larger IMF, Brazil and its equivalents have two options. They can plan to rely on powerful central banks for emergency loans — during this crisis, the U.S. Federal Reserve has provided $30 billion apiece to Brazil, South Korea, Singapore and Mexico. The problem is that financing from a central bank may come with political conditions. That might sound fine if the central bank is the Fed. But what if it's the People's Bank of China, which has more than enough reserves to play the IMF surrogacy game? A weak IMF could hand a powerful policy tool to China.

The other option for countries such as Brazil is to self-insure. This is beginning to happen. But this every-country-for-itself reserve accumulation is wasteful and the savings that pile up in central bank vaults will largely take the form of dollar bonds — that is, lending to Americans. If the past few years are a guide, the resulting whoosh of capital into the U.S. will inflate the next bubble.

The Bush administration says the IMF is fine for now and sees no need for an expansion. But the Obama team will soon have its hands on the controls. A bigger IMF should be on its agenda.

Sebastian Mallaby is a fellow for International Economics with the Council on Foreign Relations. He wrote this commentary for The Washington Post.