It comes as the Chancellor, Jeremy Hunt, met with G7 finance ministers in the US following a report by the International Monetary Fund (IMF), which sparked fears of a global banking crisis.

Speaking at an event in Washington, Andrew Bailey said the reforms that were put in place after the 2008 financial crisis “have worked”, and banks in the UK are in a good position.

“In recent weeks we have seen the crystallisation of problems in a few parts of the banking sector,” he said at an event hosted by the Institute of International Finance.

“This is against a background of a necessary sharp tightening in monetary policy to bring down inflation from levels that are much too high.

“All of this has to be set against the most serious global pandemic for at least a century and the most serious war in Europe since 1945.

“The post-crisis reforms to bank regulation have worked. Today I do not believe we face a systemic banking crisis.”

Shares in London rose yesterday as traders returned from the long weekend in a buoyant mood which helped to send France’s main stock index to a new high.

Concerns from the IMF that the global economy is facing an “uncertain” outlook also did not appear to take the wind out of the sails in European trading capitals.

Jeremy Hunt yesterday met with his counterparts from G7 countries for the IMF Spring meetings.

On Tuesday the IMF released an updated forecast which said that Britain’s GDP would shrink 0.3 per cent this year, the worst of any of the nations in attendance.

Paul Johnson, the director of the Institute for Fiscal Studies (IFS), told PoliticsHome last year’s political turmoil with Liz Truss may be among factors that contributed to the downbeat forecast for the country’s economy.

“I don't think we've learned anything particularly new,” said Johnson responding to the IMF's latest forecasts,” he said.

“When the last IMF report said much the same stuff - I mean, this one's actually slightly less gloomy than that one. We know that the UK economy over the last four years has done less well than other major economies.”

“And the sort of political uncertainty that we had last year, really hasn't helped in terms of investment, and so on,” he added.

Today a new report by the Federation of Small Businesses (FSB) also urged ministers to make “serious changes” for small firms in rural areas due to the “unique” set of challenges that they face.

It said that “little progress” had been made on the Government’s 15-point plan for rural productivity since 2015.

Martin McTague, the FSB’s National Chair, said that after “decades of promises from the Government, inadequate transport and poor digital connectivity are still putting these rural firms at a disadvantage”.

“Our research highlights how rural small firms are the bread and butter of their communities, full of diversity and ambition.

“They provide local employment opportunities, drive innovation, and generate economic growth.”

'We are not facing a global banking crisis' Andrew Bailey insists