The Australian Bankers’ Association (ABA) today welcomed the release of the comprehensive Interim Report of the Financial System Inquiry as an important step towards building confidence in Australia’s strong economic future.
Steven Münchenberg, Chief Executive of the ABA said: “Australia’s economic future depends on having a stable, competitive and efficient financial system. We agree with the Murray Inquiry conclusions that the system has performed well, but that there is no room for complacency.”
“Over the past two decades, Australians have enjoyed some of the highest living standards in the world, in part due to the strengths of our financial system. The Inquiry provides the opportunity to establish a blueprint to ensure our financial system continues to support this prosperity and to give Australians confidence in their financial and economic future.”
“While our system works well overall, there are future challenges, including the inherent pressures emanating from the globalisation of financial markets, customer demands for a wider variety of financial products and services and the challenges and opportunities that come from technological innovation.
“We support the Inquiry’s focus on funding the economy, to ensure all parts of the economy, including small business, get the funding they need to grow and create jobs.”
“Recognition that the banking sector, while concentrated, remains competitive is welcomed, as is the focus on possible options to improve competition further.”
“The need to balance the important role technology is going to play in the future of banking, and the benefit it brings to customers, with managing potential risk to customers and the financial system is also supported.”
The Interim Report’s observations and options will require careful consideration, however, it is clear that some of the issues raised will be challenging for banks.
Mr Münchenberg said “The Interim Report raises the question of whether there should be mandated structural changes for individual banks, or a general ring-fencing requirement, separating out retail banking. This would mean a profound restructure of the industry. As the Interim Report notes, the share of Australian banks’ balance sheets used for investment banking activities is lower than in many other countries and ‘ring-fencing’ would come at a cost.”
“It is important to see issues like ‘too big to fail’ covered in the report. We need a considered discussion about ‘too big to fail’ and ultimately a deeper understanding of what it means and what might be done about it. We would expect banks to have a range of views on this issue.”
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