Governments, banks and households struggling with too much debt are dragging down the world's economy and more needs to be done to make the banking system safer, a global organisation of central banks has warned.
The Bank for International Settlements said in its annual report the world economy remains out of balance, with advanced economies struggling with debt and emerging economies growing strongly but facing risks of their own version of boom and bust.
The BIS - a Basel-based organisation of central banks - said it's key for governments to make banks take responsibility for their losses and force them to rebuild their finances.
"The world is now five years on from the outbreak of the financial crisis, yet the global economy is still unbalanced and seemingly becoming more so as interacting weaknesses continue to amplify each other," the BIS said in its 82nd annual report.
"The goals of balanced growth, balanced economic policies and a safe financial system still elude us."
Governments have put billions into rescuing banks and central banks have slashed interest rates.
This has left an uneven and fragile recovery, with high unemployment and increased levels of government debt afflicting developed economies. Meanwhile, the 17-countries that use the euro have sunk into a crisis over excessive government debt.
The aftermath, says the BIS, is that governments, banks and consumers are all trying to cut back on debt at the same time, magnifying each other's problem.
The report also emphasised the need to increase the safety of the banking system by pushing banks to be responsible for their losses, add to their financial buffers and avoid risky practices.
It added that big banks still have an interest in using high-risk debt to magnify any trading gains because they can expect taxpayers to cover their losses if things go bad.
"These conditions are moving the financial sector towards the same high risk profile it had before the crisis," it said.