(1 November 2010 – Australia) The International Monetary Fund (IMF) has said that Australia’s banking policies helped the nation’s major lenders survive the global financial crisis.A staff report, to be released at the end of this week, gives merit to existing banking regulations, responsible for keeping banks profitable and comes only a day after the Senate voted to hold an inquiry into banking competition.
The report goes on to credit the “four pillars” policy, which prevents the major banks from merging and limits risky behaviour, for maintaining financial stability.
The IMF also called upon the Reserve Bank of Australia to keep interest rates steady at 4.5 percent.
“Keeping policy rates on hold since May 2010 was appropriate, in light of increased uncertainty about prospects for the recovery,” it said.
“With lending rates in Australia close to 10-year averages and economic activity responding quickly to cash rate adjustments, the RBA has scope to wait for the outlook to become clearer.”