SCENARIOS: How can policymakers halt the financial carnage?

LONDON (Reuters) - Global finance ministers and central bankers meet in Washington at the G7 and the International Monetary Fund this weekend to discuss a response to the global financial crisis.

A coordinated approach by the world's major economies to strengthen the banking sector is urgently needed to stop the financial market carnage, analysts say.

Restoring confidence is the top priority. But the complexity and global nature of financial interlinkages make solutions difficult to agree upon or even to implement.

Ad-hoc packages of national measures have so far failed. Analysts say individual country efforts must be globally coherent and internationally reinforcing.

Here are some of the ways that could be achieved:

MONEY MARKET/INTERBANK GUARANTEE SCHEMES

Getting short-term money markets working again is critical to keeping the gears of the financial system greased. Momentum appears to be building toward guaranteeing these borrowings.

The UK government's promise to guarantee short-term lending between banks, known as the interbank borrowing market, could be a template for Europe and other G7 countries to follow. It would help unlock frozen money markets because it would give ailing banks a top credit rating and other banks would be ready to extend credit to them again on a daily basis.

The International Monetary Fund said on Friday guaranteeing bank deposits and interbank operations was "unavoidable".

British Prime Minister Gordon Brown has written to leaders of the world's major economies for concerted action to guarantee lending among banks, according to a G7 source.

Britain offered to guarantee up to eight UK banks' new short and medium-term debt, estimated to cover up to 250 billion pounds ($428.85 billion) of new borrowing.

If successful and followed across Europe and beyond, many analysts reckon money market tensions might start to ease.

There is no single Treasury authority serving the 15-nation euro zone or 27-nation EU. But analysts say the European Investment Bank (EIB), the policy lending arm of the EU, could step into that space.

CAPITAL INJECTIONS/NATIONALISE BANKS

Stronger capital could encourage banks to lend to each other. Pumping taxpayer money into crumbling banks could be the key to giving them the capital they need to begin lending again. Governments around the world could take equity stakes or nationalize institutions.

Injecting capital into several banks at the same time could remove the current stigma that an individual institution is in need of funds. This could help prevent a run on the banking system.