Stephen Hester made the comments during a speech at the annual meeting of the British Bankersâ Association.
âEverywhere it suited consumers to be able to consume more, to see housing values increase, to enjoy higher public spending based on buoyant tax revenues,â he said.
Mr Hester, who was quoted by Bloomberg, added: âIt suited countries to be able to run big trade deficits and it suited investors to see rising asset values. No one, it seems, wanted to take the punchbowl away. Reforming the banks is necessary but not enough.â
The RBS chief added that the financial institution had performed well when providing loans to corporate clients, stating that up to Â£40 billion had been offered to new businesses during 2009.
Meanwhile, the bank, which is 83 per cent owned by the government after relying on taxpayer bail-outs to stay afloat during the global credit crisis, is currently looking for a corporate adviser to assist with the sale of its insurance division.
By Jim Ottewill