Former Bank of England governor Lord Mervyn King has warned the UK’s financial system is not “entirely safe”.
Speaking on BBC Radio 4’s Today programme yesterday, King questioned the banking system’s ability to withstand another crisis and argued the core problems that led to the meltdown have not yet been dealt with.
He said: “I don’t think we’re yet at the point where we can be confident that the banking system would be entirely safe.
“I don’t think we’ve really yet got to the heart of what went wrong.”
The warning comes despite banks and other financial institutions being forced to hold greater a greater percentage in capital, to prevent the risk of failure in the event of another downturn.
King, who was at the helm of the Bank of England during the crisis, went on to say that imbalances between global economies have not yet been resolved. He added keeping base rate at the low of 0.5 per cent cannot go on.
“The idea that we can go on indefinitely with very low interest rates doesn’t make much sense.” He added, however, that raising interest rates now “would probably lead to another downturn”.
The former Bank governor was criticised on Monday for describing his time working through the financial crisis as “exciting”.