Bank of England Governor Mark Carney (L) and European Central Bank Governor Mario Draghi speak before a meeting of the International Monetary and Financial Committee (IMFC) at the World Bank/IMF annual meetings in Washington October 11, 2014.
IN PHOTO: Bank of England Governor Mark Carney (L) and European Central Bank Governor Mario Draghi speak before a meeting of the International Monetary and Financial Committee (IMFC) at the World Bank/IMF annual meetings in Washington October 11, 2014. Reuters/Joshua Roberts

Despite outward signs of stability, Britain's financial system is not on the pink of health and looks incapable of withstanding another global financial crisis. This concern about British banks was raised by former governor of Bank of England, Lord Mervyn King, who warned that the banks in U.K. were not yet "entirely safe". In an interview with BBC Radio, King doubted the banking system's ability to withstand another crisis and aligned it with the core problems that caused the meltdown, which have not been properly addressed. "I don't think we've really yet got to the heart of what went wrong," he said.

Interest Rates

The worrisome warning of the former BoE governor comes despite banks and other financial institutions claiming to hold greater percentage in the capital, to insure against the risk of another downturn. King is credited with vast experience as a chief banker and a policy expert. He was heading the Bank of England when the global crisis broke out, reported Money Marketing.

The banker observed that imbalances among global economies are far from resolved and wondered how long the current strategy of keeping base rate at the measly 0.5 percent can go on. "The idea that we can go on indefinitely with very low interest rates does not make much sense." At the same time he referred to the paradox of raising interest rates also, as it will turn ominous with the chance to "hastening another downturn." King attributed the weakness of British banks in the failure of government and its officials in not "getting to the heart" of what went wrong in 2008, reported RT.

King also criticised the measures taken by the BoE to stabilise the economy. The veteran banker played a pivotal role in formulating the BoE's monetary policy from 2003-13 and was the main brain behind setting up Britain's interest rates and controlling the money supply when global turbulence rattled the economy.

Great Depression

Recalling the fire fighting acumen of BoE at the time of global financial crisis, King said Bank of England's response to the global financial crisis was exciting as it could effectively prevent the slide into another Great Depression. King claimed that his own actions as head of BoE along with the initiatives of the U.S. Federal Reserve repulsed another economic depression that would have engulfed the British and the U.S. economies, reported the Guardian.