The Bank of England’s executive director for financial stability, Andrew Haldane has likened the economic impact of the global financial crisis to that which could result from a world war.
He said the loss of income and output was the equivalent to that lost in a world war.
Speaking to BBC Radio 4’s The World at One on Monday, Mr Haldane said the anger from the general public towards banks was understandable and reasonable.
He said: "In terms of the loss of incomes and outputs, this is as bad as a world war. That is the scale we are talking about.
“It would be astonishing if people weren’t asking big questions about where finance has gone wrong."
He warned that the UK would be fortunate if the cost of the crisis would be paid for "by our children" but said it was more likely that our grandchildren would still be paying for the crisis.
Over four years since the crisis struck in the autumn of 2008, the economy is still three per cent smaller than it was at its peak.
Echoing comments from his boss, Sir Mervyn King last week, he said that banks have to realistically value their risky assets and make sure they have enough capital to cover any potential losses.
This would enable the long process of restoring public trust in the banks to begin, he said.
Last week, when presenting the latest report from the Bank of England’s Financial Policy Committee (FPC), Sir Mervyn warned that the big four lenders, Barclays, HSBC, Lloyds and RBS may need to find a further £60 billion to cover future mis-selling compensation, regulatory demands and other costs.
Mr Haldane said: "There is every reason why the general public ought to be deeply upset by what has happened – and angry.
"If we are fortunate, the cost of the crisis will be paid for by our children. More likely it will still be being paid for by our grandchildren.
"Investors will be much less willing to put their money into the banking system. They will lack confidence in the banking system and will either charge very high rates for lending that money to banks or will just withdraw their money entirely.
"We need to get our banking system firing again, to get its mojo back," he added.
Today, a report out from the High Pay Centre found that executive pay went up by 12 per cent last year despite widespread criticism of high remuneration packages from politicians and consumer groups.
Mr Haldane said that he hoped that the Libor scandal would help to begin the process of lowering bonuses and salaries for investment bankers and that they should be paid similar amounts to lawyers and doctors.
He said: "Back in 1980, your average investment banker was paid the same as your average lawyer or doctor. By the time we got to 2006, they were being paid four times as much.
"A massive discrepancy had been built up, that is now being steadily eroded. It may take some years. Have we got further to travel south? I suspect probably yes."