He called on the industrial nations, particularly Japan, to do everything they can to promote "sound policies and sustain growth."
"Everyone with a stake in the process must do their part," he said.
"Responses to crises must include appropriate private sector involvement and new financing mechanisms to combat contagion," Rubin said in remarks prepared for delivery at the Dow Jones/Wall Street Journal conference on the Americas in New York.
"Clearly the time has come to build a stronger system," he said.
Rubin will be at the center of efforts in the coming days to build that system. Top economic officials of the Group of Seven nations will meet in Washington over the weekend and will be joined by leaders of the developing world who are in town for the annual meetings of the International Monetary Fund and the World Bank.
Rubin said any solution must work for both the long- and short-term and he stressed that an ultimate solution will take "some time."
"The global economy cannot live with the kinds of vast and systemic disruptions that have occurred over the last year," he said.
Rubin said the IMF had responded to the crisis rather well, but he said fundamental changes in the institution are needed. "We must create a modern framework," he said. The IMF must become more open about its own dealings and must see the need for social and political support for its policies.
Emerging economies must also become more transparent about flows of capital and improve their supervision of financial markets, particularly banks and foreign exchange markets. He acknowledged that regulators in the developed world must also do their part to make sure that investors "act with discipline."
Rubin said the crisis had its roots in flawed economies and long-term changes in the markets that allow capital to flow at unprecedented volumes and speed. But the third major factor "has not changed over time."
"The dynamics of the markets ... are rooted in the human psyche."
Markets tend to "go to extremes," he said, mentioning the Great Depression of the 20th.
Written By Rex Nutting