London - The Bank of England (BoE) failed to understand the seriousness of the looming economic crisis despite rocketing house prices and credit levels, its deputy chief said Monday.

John Gieve said the bank had spotted "some crazy borrowing" and unsustainable asset prices but "didn't think it was going to be anything like as severe as it turned out to be."

He believed the bank, like other institutions, had failed to keep pace "with the extent of globalization," Gieve said in an interview with the BBC's Panorama programme.

He said the period of growth before the 2008 crash did not resemble previous boom and bust cycles because it lacked the "typical big increases in earnings, consumption and activity."

"We saw the credit, we saw the house prices, but we did see a fairly stable pattern of earnings, prices and output," he said.

Gieve, a member of the bank's rate-setting Monetary Policy Committee (MPC), also said that interest rates were a "blunt instrument" that would not have stopped the relentless rise in property prices at the height of the surge.

"We need to develop some new instruments which sit somewhere between interest rates, which affect the whole economy and activity, and individual supervision and regulation of individual banks," he said. (dpa)