The Archbishop of Canterbury is to set up a "quasi-monastic community" for young bankers, in an effort to encourage ethical values and a healthier culture in the financial industry.

"Failure to change the culture of leadership in the next five years…will lead to very serious consequences for the financial services industry in terms of over-heavy regulation and yet more decades of lack of trust," Welby told the Financial Times.

"Regulation is necessary but not sufficient, it is very very, very far from sufficient. Culture eats regulation for breakfast every time, we all know that, it's a cliché."

Welby, who was a treasurer for Enterprise Oil in the 1980s, joined a panel discussion at the International Monetary Fund's annual meeting in Washington yesterday, during which he spoke about his proposed initiative.

He hopes that by spending a year studying ethics and philosophy, as well as serving vulnerable people, "ambitious" young people will be given a good grounding before entering the City.

"A year of really deep reflection on self, on motivation, on the nature of theological anthropology, commitment to the common good and what that means, and service with the poor, is absolutely life-shaping," he said.

The community, named after Benedictine monk St Anselm, will welcome those between the aged of 20-35 years old, and will be established within Lambeth Palace, the Archbishop's own home.

Though the details of this particular venture are yet to be confirmed, Welby recently announced that the palace will be opened from September next year for a community of young people "hungry for a challenging and formative experience of life in a praying community."

"Living in a praying community is the ultimate wager on the existence of God, and is anything but comfortable or risk-free. Through it people subject themselves to discipline, to each other in community, and, above all, to God," Welby said.

"I expect this venture to have radical impact – not just for the individuals who participate but for life at Lambeth, across the Church and in the world we seek to serve. This is what we expect in following Jesus. I urge young people to step up: here is an open invitation to be transformed and to transform."