Banking reforms will not be delayed
(9 August 2013 – Australia) Delays to global banking reforms will not be granted, after the Reserve Bank of Australia (RBA) said Australia cannot “opt out” of rule changes designed to make the international financial system safer.
Under liquidity rules due to begin in 2015, banks will be forced to hold enough easy-to-sell assets to cover lending outflows for a month.
Alongside tougher capital requirements, the changes are likely to dampen bank profit growth and some have expressed concern that Australia is racing ahead of the world, after some countries delayed the liquidity changes until 2019.
Some bankers have urged regulators to defer changes due to Australia avoiding the worst of the GFC, however RBA assistant governor, Guy Debelle dismissed the calls for delay, despite some concerns the full impact of global regulatory changes was not well understood.
''The capital inflows that the country has experienced over many decades are sourced from the global financial system. Given that, we don't have the option just to opt out when we don't like particular aspects of it,'' Dr Debelle said at an Australian Centre for Financial Studies conference in Sydney on Wednesday.
Debelle argued there was indeed a need for a global inquiry into the full effect of regulatory changes in finance, but said Australia should also learn from what had occurred in other countries' financial systems.
''The fact that some of these problems didn't eventuate here doesn't mean it is not a good idea to stop them happening here in the future,'' he said.
Debelle declined to comment on the government's planned 0.05 percent levy on deposits.
Also speaking at the conference was RBA board member Heather Ridout, who stressed the potential of infrastructure as an asset class.
She said there was no shortage of capital willing to invest in infrastructure, but governments needed to play a leadership role that could include increased borrowing by state governments to finance the initial construction of projects.
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