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Banks are now stepping away from the tipping point as the real risk of global economic meltdown, the head of the City's regulator stated today.

Speaking to the Financial Times, Lord Turner said: "We are past the point of the danger… where we could have had a fundamental systemic meltdown of the core plumbing of the world financial system."

However, the chairman of the Financial Services Authority (FSA), who took up his role last month, warns the fallout of the financial crisis is to come.

"There are still going to be macro-economic consequences of what has occurred," he said.

However, as the threat of recession grows across the world, Lord Turner predicts no repeat of the 1930s depression.

"We don’t know how significant is going to be the economic downturn and we have to track the implications of that for the risks in the financial system," he told the FT

"If we had allowed that to turn into a systemic failure of major banks with the long long-term impact of that on the confidence in the banking system, then we could have had something really very serious. Now, I always said… any comparison with 1929 to 1933 isn't going to occur because we have learnt the lessons."

The head of the FSA is now warning banks of closer scrutiny.

"Bluntly, we have been doing a supervision on the cheap," he said.

In an interview with the Guardian he said: "There will [now] be more people asking more questions and getting more information than we were getting before.

"There is no doubt the touch will be heavier. We have to make sure it is intelligent and focused on where the risks really are."