The chairman of the Australian Prudential
Regulation Authority has warned Australia should not be complacent about its
ability to dodge another global financial crisis.
Wayne Byres told a conference in Sydney that
after the build-up to the Wall Street meltdown in 2008, the regulator is now
more active and prepared to intervene.
Mr Byers, who was not APRA chairman until
2014, had a sombre reality check about his mission to maintain a resilient
banking system in Australia as the fallout from the GFC continues to resonate
around the world.
"We shouldn't kid ourselves that the
worst of the problems elsewhere couldn't occur here or that there hasn't been a
healthy dose of luck involved," Mr Byres said.
"We can't be complacent. After 25 years
of economic expansion, it would be a surprise if the banking system wasn't in
good shape.
"But put simply, when adversity arrives
- and at some point it will - we want the banking system to help alleviate
rather than exacerbate problems. Ideally it’s a shock absorber not an
amplifier."
Mr Byres also responded to last night's 7.30
program which revealed secret APRA documents from 2007 show that lax lending
standards by banks could have could a serious question or a banking crisis.
In response to questions from the ABC, Mr
Byres signalled the regulator had ramped up its supervision of bank lending
standards between 2007 and now saying some of the issues were "eerily
similar".
"I don't think the issues were all that
different but broadly speaking the issues that were on the radar screen then -
buoyant housing lending, commercial property lending standards - are all things
that are on our agenda again.
"This time around we've been a bit more
active and interventionist maybe than we were last time but I don't think the
issues have particularly changed that much."
The former Treasury secretary, now chairman
of the National Australia Bank, Ken Henry agreed Australia remained exposed to
a new global shock.
And he revealed that in scenario planning in
the lead up to the Wall Street collapse, the potential meltdown of the global
financial system was not seen as a real possibility and that being locked out
of financial markets was the main concern.
"We asked ourselves the question -
in what circumstances could that worry cause a real problem for Australia. And
we came up with one and we thought it was so left field that there was no point
worrying about it," Mr Henry told the conference.
"And you know what it was? A meltdown of
the global financial system. This remains a risk for Australia and our
best protection is a strong public sector balance sheet, that's our best
protection."
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