Chancellor Alistair Darling has expressed confidence that Britain is finally on the road to economic recovery.
Delivering his annual Mansion House speech to the City, he warned the banks that they needed a "change of culture" in the wake of the financial crisis.
Mr Darling struck a note of cautious optimism that measures taken by the UK and governments around the world were beginning to have an effect.
He said evidence on the economy was in line with his Budget forecast in April that Britain would return to growth around the turn of the year. But while he warned there could be no return to "business as usual" in Britain's banks, he reacted coolly to proposals for EU-wide regulation of the banking sector.
On the day when unemployment hit a 12-year high of more than 2.2 million, the Chancellor acknowledged even once the recovery was under way it would take time before the jobless total began to fall. But despite "uncertainty" in the global economy, he said there were now grounds for confidence in the way ahead.
"There is growing evidence that the steps taken, at home and internationally, are stabilising the banking system and supporting our economies," he said. "And this is in line with my Budget forecast for growth around the turn of the year - and my confidence in the strength and resilience of the British economy in the medium-term. While I am cautious, I also remain confident."
In the banking sector, he said there was a need to strengthen the regulatory system while emphasising that change must begin in the boardroom with an end to the bonus culture blamed for many of the current problems.
"We need a change of culture. Their focus must be long-term wealth creation, not short-term profits," he said. "They must recognise their duty to shareholders is best fulfilled by acting in the interests of their customers and all - not just some - of their employees. And ensure staff are rewarded for long-term success - not for failure."
Mr Darling emphasised the need for greater international co-operation by financial regulators, and welcomed proposals published by President Barack Obama for an overhaul of the US system.
However, he appeared to pour cold water on proposals for a Europe-wide regulatory authority due to be discussed by EU leaders in Brussels. "We have to ensure strong, effective regulators at a national level - and retain the vital link between home regulators and national governments," he said.
