News dalla rete ITA

19 Novembre 2020

Australia

HOW A RESILIENT FINANCIAL SYSTEM SUPPORTS THE RECOVERY

The federal government is pursuing structural financial reforms that will boost the post-virus economy and bring better consumer outcomes. COVID-19 has been a stress test for the global economy. Monetary policy, fiscal policy, supply chains and national institutions have all come under the spotlight and, in many cases, been found wanting. However, Australia has fared better than most. Our health and economic response has seen the virus suppressed and the economic recovery under way. The road ahead will be hard and bumpy and not without its challenges, but there is cause for optimism and hope. Jobs are coming back and business and consumer sentiment is on the rise. Just this week, consumer confidence was up for the 11th straight week, reaching its highest level since February, and fortnightly payroll jobs data was positive, with the strongest increase in Victoria following the easing of restrictions. One of the factors underpinning Australia’s success to date has been the resilience of our financial system. Despite our economy facing the biggest shock since the Great Depression, our markets and institutions have weathered the storm. There has been no run on the banks. Credit did not seize up. Capital raisings did not end.To the contrary, COVID-19 has precipitated a "Team Australia" moment where the Morrison government, the financial industry and key regulators have come together to support consumers and stabilise the financial system. Through the RBA’s Term Funding Facility supported by the Australian Office of Financial Management has helped lower funding costs, with the three month Bank Bill Swap Rate now 0.02 per cent, the three-year bond rate at 0.1 per cent, and 10-year bonds at around 0.9 per cent. SME loans, co-guaranteed by the federal government and the banks, have supported more than 22,000 businesses with over $2 billion allocated. More than 450,000 housing and small business loan facilities, worth around $168 billion, have been subject to payment deferrals. A move facilitated by the Australian Prudential Regulation Authority with a more accommodative approach to capital adequacy. The combination of these interventions together with reforms put in place after the GFC, including capital standards, have been designed to make the balance sheets of our banks “unquestionably strong”. This has seen Common Equity Tier 1 capital reach $247 billion in June, compared to $173 billion five years earlier. Measures to strengthen capital markets have been complemented during COVID-19 by a series of other regulatory changes, including to continuous disclosure laws, virtual AGMs and statutory demands under insolvency law that have supported other elements of our financial system. In each case, the goal has been the same: cushioning the blow, keeping people in jobs and businesses in business, while building a bridge to the other side of the crisis. While these goals remain in focus, the government is also pursuing a series of structural reforms that will support the recovery and deliver better consumer outcomes across our financial system. First, consumer credit. Unfortunately, what started as a principles-based responsible lending framework has led to an overly prescriptive set of obligations that have given rise to almost a hundred pages of ASIC regulatory guidance. This has led lenders to become increasingly risk-averse and conservative for fear of falling foul of the guidance. Borrowers, irrespective of their financial circumstances, have subsequently faced a longer and more intrusive approval process. As a consequence, the government is seeking to remove responsible lending obligations for all lenders except those issuing small account credit contracts or consumer leases, with APRA’s lending standards remaining.     (ICE SYDNEY)


Fonte notizia: AFR