A clear divide between the world’s leading central banks over how best to respond to the credit squeeze emerged on Wednesday after Mervyn King, Bank of England governor, warned that efforts by his counterparts to shore up the financial system could sow “the seeds of a future financial crisis”.

In a trenchant defence of the Bank’s refusal to address the abnormally high interest rates for longer-term lending between banks, Mr King questioned the effectiveness of the kind of measures taken by the European Central Bank and said their approach could encourage “excessive risk-taking”.