The Bank of England has warned all the Banks in UK to stay alert to face some serious challenges in the near future. The Bank of England has also said that the banks should build up their reserves further in order to tackle the problems.

In the Financial Stability report, the Bank unveils that the financial crisis has increased doubts about the strength of some European banks.

It has warned that it is a very difficult period of time for the domestic banks. It advised the Banks to fulfill their demanding future regulatory requirements.

Although the Banks have increased their liquidity buffers substantially and capital in order to cope with this situation.

But according to the Bank of England they will have to do more to fulfill the new requirements.

It has also warned about the counter-party risk which is the danger of being exposed to the weaker financial institutions and weaker economies such as Greece, Portugal and Spain. Most of the governments across the world are very determined to crack down the banks after the unpleasant effect of huge financial crisis.