(27 October 2009 – Australia) The potential for a benchmark rate to be published, which shows banks’ cost-of-funds, has increased with the support of NAB chief, Cameron Clyne.The idea for a benchmark rate which shows the actual cost of funds was floated by Wizard founder and current Yellow Brick Road owner Mark Bouris last month.
Mr Clyne saw significant merit in the idea of an independent publication of a benchmark rate for the cost of wholesale funds.
The banks have been on the media, government and public chopping blocks recently for interest rate changes outside of the official cash rate change.
However, the banks’ own cost of funds does not simply reflect the official cash rate; it is also reflected by other factors such as the 90 day bank bill rate.
Mr Clyne noted that funding costs are also affected by stronger regulatory standards on things like capital and liquidity.
He also said that bank funding is becoming more expensive; the marginal cost is easing but the average cost is rising.