Banks in Australia were urged to resist one element of the worldwide reform agenda for banking regulation, the leverage ratio, by a couple of speakers at an industry forum yesterday.Ian Harper, a director of Access Economics and who served in the late 1990s on the Review of the Financial System, proposed that the industry resist use of this ratio as a management or regulatory measure. He reminded the forum that Australia dropped use of the ratio in the 1980s.Harper said that promoting the leverage ratio for banks in Australia would show that, relative to international banks, Australian banks appeared undercapitalised. Bob Edgar, former deputy managing director of ANZ, expressed doubt that the apparent consensus over reform of banking regulations - which had political support in 2008 and 2009 from the group of 20 - would persist.Harper and Edgar were speaking at a Bank Regulation Forum in Melbourne organised by LaTrobe University and the Melbourne Centre for Financial Studies.The third speaker, Wayne Byres, executive general manager of the Australian Prudential Regulation Authority, told the forum that "we do not see much benefit from a leverage ratio" provided the alternative, risk-based equity ratio was right."We got rid of it thirty years ago for good reasons."Byres suggested APRA was working alongside other bank regulators to modify the leverage ratio. The revival of this ratio, however, has plenty of supporters among bank regulators, especially in Europe.Byres told the forum that "higher minimum levels of equity are inevitable", though he noted that banks in Australia were operating with record levels of tier one capital."On this point we do not expect banks, in any way, to be short of capital," he said, though he qualified this to note that this would be the case on a risk-weighted basis.Ian Harper also said regulators needed to resist the rules proposed to offset future episodes - tied to the rescue of several European banks, the US insurance company AIG and the capital props for many large US banks and investment banks in late 2008 - of banks being deemed "too big to fail".Harper called on local regulators and the industry to resist proposals for an additional levy or tax on systemically large banks, or even to break up big banks.There are such proposals in other jurisdictions though none of this nature in Australia.Echoing positions already voiced over recent months by APRA chair John Laker and Treasury secretary Ken Henry, Byres said that "Australian banks cannot get away in this country with a regulatory system that the rest of the world judges to be weaker."Australian banks cannot rely more on cross border funding than their peers and expect to rely on rules that are weaker than elsewhere. Their counterparties will hold them to it."Ian Harper suggested that one thrust of the bank regulatory reform process in Australia was the need to not merely be seen to conform with the tenor of reform proposals but to satisfy the details, given that the Financial Stability Board (operated out of the Bank for