Ex-Bank of England chief: 'Debt will be at the heart' of the next crisis
Central banks are stuck with record low interest rates as a short-term fix to the 2008 financial crisis, and that the short-term measures distort the economy to the point that "another crisis is inevitable," said King.
"I don't think it will be a crisis in the banking system," King said at a conference organized by London Business School on Friday.
"There could be a crisis in China, or it could be in emerging market debt, or it could be in European debt - either way I think debt will be at the heart of it."
The comments mirror extracts from his new book serialised in The Telegraph, in which King writes: "Another crisis is certain, and the failure… to tackle the disequilibrium in the world economy makes it likely that it will come sooner rather than later."
Lord King was Governor of the Bank of England from 2003 to 2013, overseeing the UK government's bailout of Royal Bank of Scotland and Lloyds Bank in the wake of the 2008 financial crisis.
Despite having a hand in post-crisis central banking policy, Lord King argues that governments and central bankers have not been systematic enough in dealing with the problems that caused the 2008 crash, instead simply dealing with its symptoms.
King said that central banks rescued economies in the midst of the crisis, ensuring unemployment didn't fall far as in the Great Depression. But this gave politicians and policymakers a false sense of security.
"In the 1930s, after the Great Depression, there was a wave of financial reform and a wave of political and intellectual turmoil that fed through to politician s in the 1960s. But here it was business as usual, because central banks were able to prevent the rise in unemployment," said King.