Speaking in Zurich in his capacity as head of the Financial Stability Board, Carney said much still needs to be accomplished in overcoming the excesses that triggered the global recession of 2008-09.
And he said central banks won't be able to do all the heavy lifting — governments must also act to promote stability and economic growth.
"It's going to require a sustained implementation of policy that extends well beyond action of central banks to structural policies and national fiscal and structure measures... to fully address some of the risks that have been manifest over the course of the last couple of years," he said at a news conference Monday.
Most of the world's central banks have pushed interest rates to never before seen lows in an effort to promote economic activity. While those moves, Carney said, were necessary they do pose challenges for investors.
Last week, the Bank of Canada softened its warning about future interest rate hikes while leaving the trendsetting rate at one per cent for the 19th consecutive policy-setting date.
Asked about the rising confidence in the big banks as reflected by their higher stock values, Carney would not comment on valuations, but said there has been progress in the troubled financial sector.
He noted that over $600 billion had been raised by banks in major jurisdictions, some to cover losses, but also to build capital buffers and liquidity. And he said there had been progress on addressing the too-big-to-fail issue.
Still, Carney said it was far too early to declare victory, adding that he saw no sign of complacency among policy-makers at the just concluded conference in Davos, Switzerland.
"I'm not sure I heard a public policy-maker exhibit signs of complacency and that's a good thing, because while tail risks have been reduced, extreme negative outcomes have been reduced, they have not been eliminated," he said.
Carney also advised against complacency by market participants and authorities, cautioning they "need to be on guard against mispricing of risk and valuations of assets."
The Canadian central banker, who was in Switzerland for the Davos conference and for a meeting with FSB colleagues, did not comment on the downgrading of five Canadian banks and a Quebec-based credit union by Moody's rating service Monday.
The institutions affected were the Toronto-Dominion Bank (TSX:TD), Scotiabank (TSX:BNS), Bank of Montreal (TSX:BMO), Canadian Imperial Bank of Commerce, (TSX:CM), National Bank (TSX:NA) and the Desjardins caisse populaire.
Moody's said the downgrade was made due to concerns about record high household debt, but noted that despite the change, Canadian banks "still rank amongst the highest rated banks in our global rating universe."