Regulator talks tough on new rules The banking regulator has maintained a tough line to make banks safer during financial turmoil, saying it will not delay planned reforms. To protect the world economy from financial shocks, global authorities will force banks to hold larger amounts of easy-to-sell assets such as top-rated government bonds. In a win for overseas banks, the global regulator softened the proposal significantly in January. It delayed the starting of the reforms until 2019, and widened the pool of eligible assets to include higher-returning bonds and shares. But the Australian Prudential Regulation Authority, which has the final say on how the rules will be implemented in this country, will not be adopting the softer approach signalled by the Basel Committee, as the global regulatory body is known. On Monday APRA said the good health of Australian banks meant they were well placed to meet the new rules by 2015, as it had planned previously. Overseas lenders had been granted a reprieve because they were under financial stress, it said, but these pressures did not apply in Australia. These arrangements were introduced in light of the considerable stress facing banking systems in some regions. Australia, however, is not one of those regions," APRA said in a discussion paper. It noted the International Monetary Fund's concern that Australian banks were highly exposed to swings on global markets because of their reliance on wholesale funding markets. "This is a conservative approach but one that is fully consistent with the capabilities and needs of the Australian banking system," it said. Under the liquidity rules, banks must hold enough easy-to-sell assets to cover their lending outflows for a month - what APRA calls a "significantly severe liquidity stress scenario." Some overseas lenders will be able to include shares in these holdings but APRA said it did not think that treating equities as eligible assets would make the financial system any safer. Banks had warned against rushing to implement the reforms before the rest of the world, saying it could put Australian lenders at a disadvantage. But APRA, which prides itself on being conservative, said most large banks that were internationally active had already met the rules, and sticking to its timetable would send a "strong message" about the sector's health.