The Reserve Bank of Australia has taken on regulators in the US and Europe in a battle over new arrangements for "macroprudential" policy.The RBA opposes both separating macroprudential policy from existing financial stability policy and making it too rules-based. It says in its latest Financial Stability Review that it fears the new arrangements could disrupt the existing and apparently effective co-operative arrangements between Australia's financial regulators.The rules for macroprudential tools are currently being hammered out in various forums including the Bank of International Settlements, the Financial Stability Board and the IMF.Macroprudential policy aims to reduce the chance of another banking crisis by having banking rules respond to changes in economic and financial conditions. For instance, regulators might require banks to carry more capital when credit growth is soaring - a so-called "countercyclical buffer", a version of which will be required under the new Basel III global banking rules.The US and some European nations are believed to want a rules-based macroprudential system that has a strong standalone emphasis and has pre-defined automatic mechanisms that trigger changes in settings.But the RBA says that some advocates of separate macroprudential policy don't understand how prudential supervisors do their work. "Many are not solely microprudential in outlook, focusing only on individual institutions' adherence to regulations," it says in its Review. "They can and do take account of system-wide, or macroprudential, considerations."The RBA put on the record its opposition to:-- "Separate governance arrangements" for macroprudential policy, which, it said, are not necessary if regulators co-operate and co-ordinate.-- A sharp distinction between macroprudential policies and microprudential policies that aim to reduce risk in individual institutions.-- Simply adapting for developed countries those macroprudential tools that have been adopted in emerging markets.Australia appears to be one of several nations opposing the push by the US and others for specific macroprudential rules and institutions. New Zealand has also voiced doubts about the effectiveness of a countercyclical buffer. And Spain and China have been implementing aspects of macroprudential policy for some time and appear to want some freedom to continue to do so in their own way.