Would Australia be crazy to adopt G20 rules?

11 November 2009

1 minute read

Would Australia be crazy to adopt G20 rules?

Former Westpac boss David Morgan reckons Australia could surrender a competitive advantage in banking if it adopts global reforms designed to reduce risk in the financial system.

He says the G20 reforms on capital, liquidity, leverage and remuneration aren't all suitable in Australia. Our regulatory system has worked well, and the nation should fight hard to resist the G20 agenda.

The Big Four have been quick to plead Australia's special case. Targeting last September's discussion paper by APRA on a significant enhancement to minimum liquidity buffers, ANZ Bank chief executive Mike Smith warned against "fixing something that's not broken".

Do you agree with Smith and Morgan? Is the comparatively sound performance of the Big Four banks proof that Aussie rules don't need much reform? Should we resist the global regulatory push?

Perhaps the key question is can we resist? As Morgan points out, global capital and credit markets are likely to charge a risk premium to countries that fail to adopt G20 standards.

Let us know your thoughts below.

AUTHOReFinancialCareers Australia

Insider Comment

Ma
Max
11 November 2009
Applying these rules to Aussie commercial banks isn't a sensible approach. Tweaking our own regulation is the way to go. And in areas like mortgage regulation, it's the G20 would should be adopting an Australian approach, not the other way round.
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