There are risks but the economy is resilient

“Australia, amid uncertainty and global market fragmentation, remains a well regulated and open economy which has performed well throughout cycles and disruptions with no major downturn since 1990 and Australian growth outstripping those of many other countries,” she said.

On the global banking regulatory regime, she said there had been significant regulatory changes since the global financial crisis but countries had failed to adopt rules and regulations at a similar rate.

“I think we’re at a point where it is timely to consider the risk of market fragmentation resulting from some regulatory inconsistencies,” she said.

She said some countries had adopted the Basel III rules at different rates. Basel III is a global banking regulatory framework which, among other things, sets increased higher capital requirements.

There had also been different interpretations and implementation of standards, Ms Reemst said.

“For instance, rules for client monies can conflict in different jurisdictions, or rules for regulatory OTC [over-the-counter] margin may be broadly similar, but with enough significant differences to cause difficulties for clients, and transaction reporting can also be problematic with similar but different requirements for data in different jurisdictions,” she said.

“The impact of regulatory divergence may manifest itself in a number of ways, such as increased costs, reduced competitiveness and more onerous obligations on clients and investors.

“This is not to suggest that all regulation must be the same. There are local concerns that need to be taken into account,” she said.

“However if Basel III is a global standard, we do need better regulatory convergence.”

Source link Finance News Australia

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