The banking industry should comply with the standards of the global banking regulator.

The Australian Prudential Regulation Authority (APRA) strongly insisted on strict compliance with the global standards to be set by the Basel Committee. APRA executive general manager Wayne Byres said, “'There is no capacity for Australia to argue that we should have weaker rules than the rest of world... The rest of the world wouldn't give us that concession and we wouldn't ask for it.”

Leaders from the G20 nations demanded tougher regulations so as to safeguard the banking sector. The global banking regulations are now being formed through the Basel Committee.

Banks around the world will be required to increase their holdings of top-rated government bonds, introduce limits to bank leverage, and top up capital buffers during good times.

Local banks have argued for exemption if they come out from the financial crisis relatively unscathed. Even Australia's relatively small government bond market will bring banks running after liquid assets before the big local banks grab all the federal and state government bonds.

While there was an opportunity for Australia to have ''slightly different'' rules to reflect local conditions, any changes must be in the form of an equivalent alternative.

The APRA head said Australia's banks may have slightly different rules to cover local conditions. Byrnes said broad proposals concerning this matter should be ready for the November summit of G20 leaders.