Despite these difficulties, important consensus has emerged from recent discussions amongst regulators in a number of areas. The need for surveillance of systemic risks and the need for macro-prudential tools to reduce cyclicality are now broadly recognized. Regulators around the world are increasingly speaking the same language in terms of prudential standards and best practices in supervision. Regulators also agree that shadow banks, which have grown rapidly in recent years and often serve as a conduit for regulatory arbitrage, should be brought under the purview of financial supervision. And collaboration in rule making and supervision has improved materially, reflecting the consensus that regulators must stand together in a financial system that is increasingly complex and interconnected.

The second point I wish to make regards the continuity of financial reform. The newly proposed regulatory rules have engendered strong debate in the financial community. Debates are essential in policymaking to ensure that policymakers are well-informed of associated risks and trade-offs. However, policymakers should not be swayed from the general direction of financial reform undertaken so far.

However, policymakers must bear in mind that the promulgation of BASEL III rules does not mean the end of financial reforms. There is no magic bullet in financial policymaking, and no single reform will set things right forever. If history is a guide, we know that there will always be new risks to destabilize the financial system in the future, albeit in a different form. Policymakers should therefore always be on their guard, ready to take action. This is particularly important as the painful memory of the global financial crisis begins to fade.

And this brings me to my third point: sufficient attention must be paid to the power, resources and governance of financial regulators and supervisors. After the crisis, many countries have asked financial supervisors to play a greater role in financial governance. The term "macro-prudential supervision" has become the new buzzword within the regulatory community. Supervisors are now responsible for identifying and mitigating systemic risks in their financial systems - a truly enormous task.

If policymakers are serious about this arrangement, then sufficient attention must be devoted to the incentives and resources of regulatory institutions, so that they have the will and ability to take action when necessary. Clear mandates, sufficient powers and resources are essential. Equally important, structures, processes, reward and accountability systems must be established to ensure that regulators have the incentives to take actions that may prove unpopular, and which may be misunderstood at times.

This is especially important, because while the benefit of regulation is often hidden and hard to measure, the costs are immediately apparent. When you take away the punch bowl, everybody at the party will complain about you ruining their fun, very few will offer thanks for the reduced drunken misbehavior that was bound to happen if nothing was done.

The author is director general of the policy research bureau and statistics department, China Banking Regulatory Commission.