It could be a horror movie sequel: “excessive risk-taking” by banks is coming back to haunt us. That the warning comes not from Hollywood but from Basel makes it all the more worthy of attention. The Bank for International Settlements showed far more prescience ahead of the crisis than big bankers or the government brain trusts now reforming how they are regulated.

What the BIS warning reveals is that so far, those reform efforts have not succeeded.

In an invitation to a gathering for top central bankers and financiers the BIS worries that “financial firms are returning to the aggressive behaviour [of] the pre-crisis period”. No surprise there: governments are paying them to do so. Financing is essentially free, with central banks charging next to nothing for funds and turning themselves into dumping grounds for dubious collateral. Public treasuries' rescue operations make it inconceivable they would now let a large financial group fail – so risks are “excessive” only for the taxpayers who ultimately bear them.

There is even a case to be made that banks' behaviour is still not aggressive enough: households and businesses may well be wishing for somewhat more reckless lending.

The problem is not risk-taking in itself. People should be free to take any risk they wish with their own money. But a financial institution that is systemically important by definition risks more than its own money. The risk that needs to be lowered is the risk to society overall; if that is done, individuals with the desire and the means to gamble can fend for themselves.

The BIS suggests banks target lower returns on equity to reduce the risk in the financial system. But exhorting banks to aim for lesser returns will have about the same effect as politely asking North Korea not to pursue nuclear weapons. Only better regulation can untether economies from the fickle fortunes of finance – through resolution regimes to let big banks fail smoothly and stronger counter-cyclical capital rules to damp the cycle of credit bubbles.

Progress towards that goal has stalled. Policymakers saved the banks too fast: their divisions and timidity are an easy match for financial lobbyists' opposition to meaningful change. It is not hard to see why they resist: a safe system would force average returns lower as high-yield activities came with more frequent, but systemically harmless, failures. That would be bad for bankers and good for everyone else. The alternative is the BIS's horror vision: a return to the brink of financial collapse.