Efforts by governments around the world to bail out markets have so far failed to solve the deep-rooted problems behind the current crisis, Zhu Min, a vice president for the bank, wrote in the China Securities Journal.

"The real estate market will continue to see corrections and the stock prices of financial institutions will continue to see wide swings," he said.

Banks will remain reluctant to lend and currencies will continue to fluctuate as funds are reallocated around the world, he wrote.

"Rising defaults of industrial loans and personal loans caused by a recession in the real economy could lead to a second round in the financial crisis," Zhu wrote in the full page commentary.

The scale and nature of the crisis had been misjudged, and the lack of structure and vision in government efforts to stabilise the markets could lead to unforeseen pitfalls, he warned.

"We think the government decisions during the global financial crisis were full of contradictions and mistakes," he said.

In the next one or two years, big financial institutions previously bailed out by governments could fall into trouble again, he predicted, while smaller banks could go bankrupt and hedge funds could collapse.

Governments have injected billions of dollars into financial institutions and made concerted interest rates cuts after the crisis deepened in September with the collapse of US bank Lehman Brothers.

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