Mervyn King warns that bank rules are 'no silver bullet'

Bank of England Governor Mervyn King said last night that the government's bank levy tax and new global regulations were "no silver bullet" for curbing risk-taking in the financial sector.

Speaking in New York, Mr King called for more to be done to reduce the risks in banking and solve the problems resulting from institutions receiving financial assistance from the Government when they are on the brink of collapse - an issue often referred to as the "too important to fail" problem.

Speaking at the Bagehot Lecture at the Buttonwood Gathering, Mr King said: "Change is, I believe, inevitable. The question is only whether we can think our way through to a better outcome before the next generation is damaged by a future and bigger crisis.

"This crisis has already left a legacy of debt to the next generation. We must not leave them the legacy of a fragile banking system too."

The Treasury published legislation for its bank levy tax last week, which the government says will see banks pay an extra 2.5 billion a year by 2012 and will encourage less risky funding.