Andy Haldane, a senior Bank of England, or BOE, official on Wednesday, warned that the bond market was caught up in the biggest bubble in history, posing a serious threat to the stability of the global financial system.

“If I were to single out what for me would be biggest risk to global financial stability right now it would be a disorderly reversion in the yields of government bonds globally. There had been "shades of that" in recent weeks as government bond yields have edged higher amid talk that central banks, particularly the US Federal Reserve, will start to reduce its stimulus,” Haldane, the BoE's director of financial stability, said in a testimony to British MPs, the Guardian reported.

In response to the financial crisis, major central banks from across the globe have been driving down interest rates to historic lows by engaging in an unprecedented expansion of their balance sheets. Central banks, which opt for a low interest-rate policy when they want to stimulate growth, have kept interest rates at historic lows, but with very limited success.

To counter this, some banks such as the Federal Reserve, the European Central Bank, the BoE and the Bank of Japan have chosen to buy bonds, a strategy otherwise known as quantitative easing, to stimulate growth, resulting in a steep fall in bond yields.

"Let's be clear. We've intentionally blown the biggest government bond bubble in history. We need to be vigilant to the consequences of that bubble deflating more quickly than [we] might otherwise have wanted," Haldane said.

In response, the BoE issued a statement saying that Haldane's views were his own, and warned that there might be severe consequences if the bank raised interest rates too soon. The BoE, which met on June 6, voted to kept its benchmark bank rate unchanged at a record low of 0.5 percent.

"Any attempt to return interest rates quickly to more normal levels would recreate recession conditions," the BoE said, according to the Guardian.

The U.S. Fed launched a third round of quantitative easing in September 2012 without setting an expiry date to the stimulus. However, recent comments from some of its officials have raised speculation that the Fed might start scaling down its bond-buying program soon, distressing markets worldwide.

The International Monetary Fund, or IMF, has also warned central banks that their policies could inflate asset bubbles and threaten the world's financial markets.