Australian Prudential Regulation Authority chair John Laker said Australian lenders would be required to fall into line with what was emerging as a consensus on global banking standards.Dr Laker yesterday engaged with aspects of the industry debate over the emerging international regulatory consensus over the tightening of standards on bank liquidity and bank capital.The Age and The Australian reported on highlights of the speech."If you don't want to play by those standards, then you've got to have a very careful explanation to the market,"" Laker said.However, the APRA chairman seemed to leave the door open on a planned measure requiring banks to increase substantially their holdings of government bonds. Lenders, including the big four banks, have claimed this would be unworkable given Australia's relatively shallow sovereign bond market.One gripe of banks is the proposal that they hold liquid assets in the form of government securities equal to needs estimated to cover 30 days. Based on recent and expected government deficits in Australia, there may not be enough bonds on issue to satisfy the needs of banks, let alone demand from other investors."On a simplistic view, we know the government bond market at the moment may not generate the volumes that would be available for banks to hold as a first line of defence," Laker said."So we are talking to the industry over what other assets might provide confidence for liquidity and what role they may play as lines of defence.''Laker also defended the emerging rules on the minimum capital bases for banks, and which will give more emphasis to basic leverage ratios rather than the more malleable definition of tier one capital used now."Our prudential framework will emerge strengthened by global reform initiatives; for example, the moves to improve the shock absorbers that are so vital to financial stability - namely capital, liquidity and provisioning buffers," he said."My point is simply this - we are in no position to lecture the rest of the world on counter-cyclical capital management."Laker also reminded his audience of the significant external support for the industry late last year as confidence in banks worldwide took a beating at the height of the crisis."Some say global reform initiatives will go too far, given how well Australian financial institutions performed through the crisis," he said. "Any self-congratulatory tone here needs to be curbed - after all, many hands were involved in the lifting."