According to the Daily Mail, Mr Green suggested to delegates at a conference of the British Bankers' Association in London that the coalition's haste to clamp down on UK banking firms could have negative effects for the sector and consumers alike.
"We are three years into a crisis that is far from over. We continue to face volatility and uncertainty in our economies and financial markets," he explained.
Mr Green warned that the impending "unprecedented years of austerity" could leave Western economies vulnerable to "further shocks", amid fears that excessive deficit-cutting measures could push the UK back into recession.
His comments came after EU economy commissioner Olli Rehn urged the trading bloc's governments to be prepared to bail out banks which find themselves in further difficulty in the event of another downturn.
By Claire Archer