US Federal Reserve chief Ben Bernanke says the world is suffering from the worst financial crisis since the 1930s.
Mr Bernanke argues that the roots of the current global economic downturn stem from global imbalances in trade and flows of capital in the late 1990s.
In a speech to the Council on Foreign Relations, he argues that the US and its trading partners did not do enough to redress these imbalances.
He also says future economic recovery depends on financial stability.
Mr Bernanke says the imbalances "reflect a chronic lack of saving relative to investment in the US and some other industrial countries, combined with an extraordinary increase in saving relative to investment in many emerging markets."
As a result, saving flowed into developed economies for more than a decade, despite low interest rates, he argues.
Risk management systems in the private sector and government regulation then failed to "ensure that the inrush of capital was prudently invested," he says.
The BBC reports world leaders will meet next month in London to discuss measures to tackle the downturn.
Mr Bernanke calls for "forceful, coordinated" action to combat the financial crisis.
"Until we stabilise the financial system, a sustainable economic recovery will remain out of reach," he says.
The US government has already taken a number of measures to combat the economic downturn sparked by the financial crisis.
Last month, the new Obama administration signed into law an economic stimulus plan worth about $US787 billion.
The package included tax cuts, additional spending on infrastructure and aid to US states, which are having their own budget difficulties.
The Fed has also cut US interest rates down to between zero and 0.25% to try and stimulate consumer spending.
Mr Bernanke will meet other G20 finance ministers and central governors in Britain this weekend to try and agree a collective response to the economic crisis, ahead of a G20 summit in London in April.