Fixed-income products adopted over international funding
(15 November 2012 – Australia) A call for urgent reforms to wean banks off overseas funding was voiced by National Australia Bank (NAB) chief executive Cameron Clyne on Tuesday night.
He believes Australia’s banks are ill-equipped to finance a looming pipeline of critical infrastructure because they rely on volatile foreign funding markets.
He said the nation’s banks heavy use of wholesale funding markets still posed a key economic risk.
Banks raise up to A$100 billion a year from overseas and many foreign lenders retreating from Australia, Clyne said local banks were ''not set up optimally'' to finance up to A$700 billion in infrastructure that would be needed.
Clyne suggested polices such as greater allocation of retirement savings to fixed-income products, a deeper domestic bond market and tax changes as ways to optimise finance for long-term investments to prosper over coming details.
He said the nation’s banks heavy use of wholesale funding markets still posed a key economic risk.
Banks raise up to A$100 billion a year from overseas and many foreign lenders retreating from Australia, Clyne said local banks were ''not set up optimally'' to finance up to A$700 billion in infrastructure that would be needed.
Clyne suggested polices such as greater allocation of retirement savings to fixed-income products, a deeper domestic bond market and tax changes as ways to optimise finance for long-term investments to prosper over coming details.
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