Alistair Darling has warned bankers they will be "brought back to Earth" if they engage in excessively risky trading.
Speaking before unveiling next week's banking reform White Paper, the Chancellor of the Exchequersaid he would not legislate to cap bonuses.
But he warned that regulators would be given more power to intervene if firms offer rewards that encourage risky behaviour.
"There are people who are too complacent in my view," Mr Darling told The Independent.
"They need to be brought back to Earth."
He added: "If they go back to the way they were - to business as usual - without asking themselves over and over again what they are doing, that would be disastrous for them and the rest of the world.
"As the economy begins to recover, people must not drop their guard but strengthen their guard to make sure they don't repeat the mistakes of the past.
"Similarly, the regulators must keep a very close eye on what is happening and be vigilant about the risks. It is very important people don't get the idea it is all over, that they don't need to bother."
Reports have suggested a return to an excessive bonus culture in the City.
Mr Darling told the Independent that some banks are operating only because they have been rescued by taxpayers.
He indicated that next week's banking reform White Paper will include new powers for the Bank of England and Financial Services Authority to prevent a repeat of last autumn's banking crisis.
Mr Darling played down reports of a turf war between Bank of England governor Mervyn King and the FSA, led by Lord Turner, over who will wield powers to regulate the banks.
He indicated that the White Paper will retain the "tripartite" regulatory system, which divides responsibility between the Bank, FSA and Treasury.
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