Australia has possessed an extremely successful financial market system courtesy to the Government implementation of influential regulatory bodies. These regulatory bodies such as the Reserve Bank of Australia (RBA), Australian Securities and Investment Commission (ASIC) and the Australian Prudential Regulation Authority (APRA), play a highly significant role in the operation of the Australian economy. Their responsibilities are to regulate Australia’s financial markets, to make the Australian economy fair to promote economic activity. The Australian economy has adopted an effective economic structure that is administered by these three major independent regulatory bodies in conjunction with Federal Government Treasury and other …show more content…
It is clearly evident from the unemployment trends, which countries were significantly affected by the GFC. For example, Australia experienced a small spike in unemployment by 1.3% between 2008 and 2009 before maintaining a steady unemployment rate of around 5% for the next three years. Other developed countries such as USA who experienced a 4% increase in unemployment, the United Kingdom with a 2% rise. The European Area generally was greatly affected by the GFC, with an estimated increase of 2% from 7.6% to 9.6% unemployment rate of the entire European region, with that statistic continually rising with economic concern in the European markets. Australia’s economy was extremely resilient fundamentally a result of the well-structured, regulated financial system which intends to contribute to the overall performance of the economy. The Australian economy is structured according to the Wallis Inquiry of 1997, where a “twin peaks” model of financial regulation was proposed as stated by Jennifer G Hill from CLS Blue Sky. The report offered dramatic changes to the regulatory structure of the Australian economy, with several regulatory bodies forced to closure and responsibilities within the economy dispersed among several new regulatory bodies such as APRA and ASIC. Under this model, APRA is responsible for prudential
Australia’s government has helped to intervene within the market when issues have arisen. The more efficient allocation of resources and income is an initiative designed to assist the society. Unfortunately, it can also cause costs to the community and market which can be seen from side effects of their policies. The tight and loose monetary policies that are used can cause unemployment and inflation which are both a cost for the economy. The government also imposes tariffs which causes unfairness for consumers.
Following the GFC, James learnt that economic fluctuations and circumstances can instantly change without warning. In addition, as a result of the GFC, James has become a more conservative consumer. This trend of streamlining spending is evident in the current economic climate with low inflation in major global economies combined with low economic growth. James’s perspective of the GFC provided me with a greater understanding of the global economic climate and the unique attitudes and perceptions towards the Global Financial Crisis. During the interview, James stated that he was surprised to witness long-standing and well-established companies crushed by the financial and economic hardships of the recession. “The insolvency of Bear Sterns and Lehman Brothers came as a huge surprise to financial sector”. Said James. James also provided a detailed insight into why the United States and European markets were so affected by the GFC, and how their downturn rippled across the global economy.
There are five very important economic systems that are used worldwide. The top five are Traditional, Command, Market, Mixed, and Capitalism economic system. Each economic system has different priorities and goals.
This report will detail the state of the Australia economy using key economic indicators, and provide an analysis and pinpoint any economic problems. Using this information it will further provide recommendations how to apply the monetary policy in the short and medium term to help the Australian government achieve its main economic objectives. Finally it will state the effects of these recommendations using three outlined economic criteria.
Booms, busts, recessions, and growth; all of the preceding terms are characteristics of a typical market economy. There are times when an economy can flourish spectacularly and there are times when it can fail miserably. Consequently, it is the responsibility of a nation’s central bank to manage these fluctuations through conducting effective monetary policy. The following paper will assume the perspective of the Reserve Bank of Australia (RBA) and critically analyze the past, present, and future of the Australian economy while considering specific sectors.
Australia has been one of the few developed nations to remain largely unscathed by the global financial crises of 2008 – a crisis, which has left in its wake seemingly intractable problems of unemployment, large government debts, financial fragility and political unrest in Europe, Japan and North America (McAuley 2012). This would be further explored in the essay.
This changing market has had numerous implications for a various number of parties such as central and state governments, Australian corporates and fixed interest fund managers. The evolution of the Australian bond market over the past several years has been shaped to a large extent by the fallout from the global financial crisis.
Australian Securities and Investment Commission (ASIC), an independent Commonwealth Government body, established under Australian Securities and Investments Commission Act 2001 (ASIC Act ) which sets out their powers and function. Their main purpose is to regulate financial services, corporate and markets with a majority of their work being under the Corporations Act 2001 (Corporations Act) and the National Consumer Credit Protection Act 2009 (National Credit Act). They have powers to protect consumers against deceptive or misleading and unconscionable conduct affecting all financial products and services including credit (ASIC 2015). Furthermore, they are empowered to investigate suspected breaches of the law, issue infringement notices and prohibit people from engaging in providing financial services or credit activities. Subsequently ASIC can seek civil penalties from the courts and commence prosecutions.
The Australian stock exchange goes as far back as the mid 1800s. Australian originally had six separate exchanges throughout the country. The first stock exchange in Australia was founded in 1861 in Melbourne followed by the Sydney, Hobart, Brisbane, Adelaide and Perth one in each capital of every Australian state. In 1937 the Australian Associated Stock Exchange (AASE) was to establish to secure rules for brokers and commission rates. Representatives from each exchange were present to represent their exchange at the AASE. Up until 1960 trades were made by a call system in which the names of each company was called out and broker put in their bids. Post 1960s the system changed and they hired employees called chalkies who wrote bids and offers on a board throughout the trading hours and recorded all transactions.
The current regulatory framework for the Australian finance sector largely owes its conception to the Financial System Inquiry (“the Wallis Inquiry”). The Wallis Inquiry had recommended the establishment of the twin peaks model, under which three specialist financial sector regulatory agencies operate. It was also recommended that these three regulatory agencies be based on the functions they performed rather than their traditional status. The government eventually adopted these recommendations and the three key regulators known today are the Australian Prudential Regulation Authority (“APRA”), the Australian Securities and
APRA was established following the Wallis Committee’s recommendation in 1 July 1998 under Australian Prudential Regulation Authority Act. In the amended Banking Act 1959(Cth), responsibility for the conduct of prudential supervision and depositor protection moves from the Reserve Bank to APRA. Its intention is to provide for a ‘more consistent, competitively neutral and efficient approach to the regulation of financial institutions, while enhancing overall depositor protection and financial system stability’1. This paper will thus find out about ARPA’s responsibilities related to banking in traditional sense of the term.