Davos 2013: Carney says next two years decisive for banks 26 January 2013 Last updated at 17:45 Mark Carney says that 2013 and 2014 are going to be decisive years for financial sector reform The incoming governor of the Bank of England has said the next two years will be "decisive" for bank reform. Mark Carney, current governor of the Bank of Canada, said "shadow banking" and the issue of "too big to fail" would be tackled. The 2008 crisis would be repeated if unregulated financial activities - blamed for amplifying the meltdown - went unchallenged, he said. He also warned that central banks alone could not eliminate "tail risks." He said that, contrary to some reports, tail risks - essentially worst-case scenarios - in Europe and the United States remained. Shadow banks are companies that operate like banks but fall outside current oversight. "The next two years will be decisive on ending 'too big to fail' [for banks] and addressing shadow banking and over-the-counter derivatives, that absolutely amplified the last crisis - and will do so again if we don't complete our agenda," he told an audience at the World Economic Forum in Davos. Monetary toolbox Jorn Madslien BBC News, Davos The calm mood in sunny Davos is open to interpretation. It might be tempting to see it as a reflection of hope that the global economy is back on track and picking up pace. But equally, it could be taken as a sign of exhaustion, bringing pause to an economic crisis that has been long and tiring. Nobody here expects a sharp and sudden recovery, especially not in the US or the eurozone. But these days, politicians and business leaders seem happy as long as they are not in the eye of a storm. Over-the-counter derivatives - unregulated because they are privately negotiated between two parties - were blamed for exacerbating the financial crisis. Mr Carney takes up his new position at the Bank of England in June. His comments could hint at what is to come when he succeeds Sir Mervyn King at the Bank, which has seen its financial regulatory powers increase since the financial crisis. Mr Carney also rebuffed criticism that countries had "maxed out" all monetary policy options by major economies. Part of the point is to ensure that as the economy gains traction, stimulus will continue to be provided appropriately. International Monetary Fund managing director Christine Lagarde, who was present on the panel alongside Mr Carney, also said that the European Central Bank had to keep its monetary toolbox open. Risks of relapse Those tools that are in the toolbox have to be operational. It doesn't necessarily mean they have to be used... but they must be operational," she added. Unconventional monetary policies pursued by the ECB have brought some respite to markets recently. Operations including its Outright Monetary Transactions (OMTs) and the Long-Term Refinancing Operations (LTROs) helped bring down yields on eurozone sovereign bonds, making it less expensive for governments to borrow on international markets and pay off their interest payments to creditors. Meanwhile Ms Lagarde warned against the "risks of relapse," urging countries to keep up with reforms, especially in the eurozone, to pursue banking and fiscal union while keeping pace with structural reforms. She said 2013 was "not going be a walk in the park" for the euro area but would be far better than last year. With regards to the US, she said the government should change its debt trajectory and "indicate promptly" how to cut debt.