Sir Mervyn King, governor of the Bank of England will hand over the reins to Mark Carney on 1 July 2013 (Photo: Reuters)
Mervyn King said that the financial system would not be 'safe' in another crisisReuters

Former Bank of England chief Mervyn King said the UK's financial sector is not yet safe from another financial crisis, despite new rules which force banks to hold more funds in reserve.

King, who retired from running the BoE a year and a half ago, said: "I don't think we're yet at the point where we can be confident that the banking system would be entirely safe."

He was being interviewed on Radio 4's Today Programme. "I don't think we've really yet got to the heart of what went wrong," he said.

King said he expected interest rates to rise soon; the UK's interest rate has remained at a low of 0.5% for the last five years.

"The idea that we can go on indefinitely with very low interest rates doesn't make much sense," he said.

However, if rates were to rise right now this would probably lead to another downturn, he added.