Fragilities in the financial system remain at the front of the minds of global banking regulators, with the head of the Bank for International Settlements producing a defence of an incomplete post-crisis program of reform.Jaime Caruana, general manager of the BIS, used a speech in Lisbon to rally industry regulators to be more proactive in their approach to supervision, as a buttress to more stringent rules on capital, liquidity, derivatives trading and work-out plans for troubled entities."Seven years after the crisis, there seems to be a disconnect between this impressive amount of work and the sense of unease among financial market participants," Caruana said."This unease serves as a good reminder that financial stability is a broad issue and that regulation is only part of the solution … We should thus interpret the unease as a call to reflect on how to cement the gains of the post-crisis regulatory reform," he said.?Caruana highlighted that "banks around the world need to address [equity] markets' scepticism, which is evident in low price-to-book ratios. At around 0.5 times on average, these are particularly low for euro area and Japanese banks. And they have been on a downward trend for many Latin American banks."Caruana did not foreshadow any drive for new or more assertive versions of current reform themes, but stressed the need to "complete the current regulatory agenda."Signalling a level of content with industry progress, at a global level, Caruana said "at the current juncture, there is a general sense that minimum capital requirements are roughly within an adequate range. "The remaining work on finalising the regulatory agenda is not intended to raise capital significantly. Of course, this comes with the understanding that national authorities may go beyond the minimum requirements, if necessary, in order to address specificities."The BIS chief tucked one priority into his speech, which was addressing unease over "the preferential treatment of sovereign exposures", a category of bank lending with a minimal or zero risk weight in many jurisdictions.Caruana said the "historical evidence" was that "local currency debt is not risk-free and exposure to it can wreak havoc on banks. "Given this evidence, the preferential treatment of sovereign exposures is distortionary [and] leads to a mispricing of risks that could translate into a misallocation of resources, such as from SME financing to sovereign financing."