Turmoil in financial markets is far from over and the British banking system needs to be restructured to prevent any repeat of the Northern Rock crisis, according to Bank of England governor Mervyn King.

Mr King told business leaders in Belfast last night that the present financial crisis was unusual because it came about against the background of five years of strong global growth and a decade of economic stability in the UK.

Speaking at the Northern Ireland Chamber of Commerce president's banquet, he said the crisis had arisen from the way banks had managed their liabilities.

The governor strongly defended the role the central bank played in the Northern Rock crisis, which led to the first run on a British bank in more than 100 years. He said commercial banks had wanted the Bank of England to help them turn illiquid assets into cash, and Mr King said the central bank had been extremely cautious about doing that because it could create in his opinion "a moral hazard" - where banks would expect to be rescued even if they had acted recklessly.

Mr King has come under severe criticism for the amount of time it took before the bank intervened in the Northern Rock crisis.

He said three key lessons needed to be learned from the Northern Rock crisis. The first was that liquidity should be central to the regulation of banks. Second, the absence of a mechanism in the UK for intervening pre-emptively in a bank in trouble needed to be addressed and, thirdly, a reform of deposit insurance was imperative.

If any of his audience were hoping that Mr King might drop a hint about where UK interest rates - currently at a six-year high of at 5.75 per cent - are heading, they were left disappointed. His only direction on the subject was that the bank would not be distracted from setting interest rates to meet the 2 per cent target for consumer price index inflation.

Last night marked the first time that the court of the Bank of England and the monetary policy committee had met in the North. But Mr King said Northern Ireland had never been ignored by the central bank.

"As you continue to build the political successes and economic prosperity of the new Northern Ireland, the Bank of England will support you wholeheartedly through our efforts to provide a platform of economic stability."