Bank of England Governor Mervyn King said on Tuesday that consequences of the financial crisis, sparked by the failure of Lehman Brothers exactly a year ago, will be pervasive and long-lasting.
In a opening statement before issuing a British inflation report, King said that "there is a long hard road ahead to restructure our financial sector."
"Over a number of years, banks will be required to hold much larger and more effective buffers of capital and liquid assets to make the financial system less susceptible to the sort of panic that occurred last year," he said.
He also said that there are now signs that economic growth in Britain has resumed in the third quarter and inflation over the next year is likely to be volatile.
"But looking further ahead, the strength and sustainability of the recovery is highly uncertain and the balance of risks to inflation around the 2 percent target remains on the downside," he said.
The British economy declined for five quarters in a row as of the second quarter of this year, and many analysts have predicted that the UK economy will drop by more than 4 percent in 2009.