The federal government must resist unnecessary change to local banking regulations after the Group of Twenty (G-20) leaders last week pledged to extend oversight across all systemically important financial institutions, the Australian Bankers’ Association (ABA) said.
“Australian banks are already well regulated and we have a strong banking system,” ABA chief executive David Bell said.
“Our federal government must resist unnecessary change. It will be in Australia’s interests to make sound decisions in light of the strong regulatory framework in Australia.
“Best practices may in fact be closing the gap between practices overseas and practices here.”
Australia and Canada are among G-20 members which have not required taxpayer-funded bank bailouts since the financial crisis began in 2007.
Australian banks have made good lending decisions, are well regulated and are the beneficiary of good economic management by successive governments, Bell said.
“The ABA believes where there has been damaging inconsistencies in global regulation, they should be addressed,” Bell said.
“However, we would not like to see the adoption of any regulation which is sub-standard to Australia’s, given that our banking sector is strong and well capitalised.”
The G-20 met in London last week and agreed to establish a new Financial Stability Board with a strengthened mandate as a successor to the Financial Stability Forum.
The ABA supported the creation of the board but said it should collaborate with the International Monetary Fund and the International Organisation of Securities Commissions to enhance best practices across all signatory jurisdictions.
The G-20 agreed to take action, once recovery is assured, to improve the quality, quantity, and international consistency of capital in the banking system.
“In future, regulation must prevent excessive leverage and require buffers of resources to be built up in good times,” the G-20 said on its website.
