Sir John Gieve, deputy governor of the Bank of England, warned yesterday that it was �too soon� to declare the global financial crisis over and said authorities around the world must stand ready to step in again if required.

Sir John Gieve, deputy governor of the Bank of England, warned yesterday that it was "too soon" to declare the global financial crisis over and said authorities around the world must stand ready to step in again if required.

However, he said measures to recapitalise banks and guarantee new debt issuance, in the UK and elsewhere, had "improved the prospects significantly".

Gieve, whose remit is financial stability, highlighted continuing strain in the financial system and growing signs of stress in emerging market economies in a speech to the British Bankers' Association's 12th annual supervision conference in London.

He highlighted a need to introduce "macro prudential" measures to bridge the gap between monetary policy and regulation of individual institutions.

Gieve cited the Spanish model as one which could be followed, where banks build up reserves as loans are originated and then drawn them down when the economy begins to deteriorate and actual losses are incurred.

He also cited the need to establish a more effective regime in the UK for handling failing banks. He defended plans to split institutions into good and bad parts where this made sense, highlighting the proposed guarantee that creditors would be no worse off than if such division had not occurred.

Gieve also highlighted the need to improve the handling of cross-border crises and bank failures.

He said: "We saw in late September and early October the danger emerging of the banking equivalent of the old beggar-thy-neighbour policy on currency depreciation, as individual countries began to guarantee their own banks' debt.

"On the other side, recent events have also demonstrated how effective international action can be: the coordinated interest rate cuts on October 8; the provision of dollar liquidity by central banks and the adoption of national measures to support banks at international meetings during the weekend of October 11 and 12."