The Gillard Government welcomes the release overnight of the final details of new global capital and liquidity standards by the Basel Committee for Banking Supervision (BCBS).
Together with our financial regulators, we've worked hard through the G20, the Financial Stability Board and the BCBS to agree on comprehensive reforms to the global financial system to ensure we never see a repeat of the global financial crisis and the job losses around the world that came with it.
Australia's financial system will, of course, comply in full with these new international standards. We did not suffer the same excesses as those seen in Europe and the US so we will not require the same degree of adjustment.
We've worked hard to ensure that we can apply these global standards in Australia so that they are entirely appropriate for our unique domestic circumstances, which is a great result for all Australian families and small businesses.
These new standards will not come into full effect until 2015, and no Australian bank will be able to cite them as justification for stinging customers with any additional costs. On the contrary, our work at the G20 will improve stability in the global financial system, which will benefit all Australians.
Our global peers recognise there is simply not enough Australian government debt for our banks to meet the liquidity standards as originally drafted and therefore developed rules to allow us to fully comply. Australia's net debt will peak at just 6.4 per cent of GDP in 2011-12, compared to the 90 per cent average of major advanced economies.
The Reserve Bank and APRA have today announced a framework for implementing the standards in Australia.
Australian institutions will comply with the standards by establishing a committed secured liquidity facility with the RBA, sufficient in size to cover any shortfall between the requirement to hold high quality liquid assets under the global standards and the volume of liquid assets available in our domestic market.
In return for the committed facility, the RBA will charge a market-based fee, which will be set at the same level for all banks accessing the facility.
This new framework will ensure that all Australian banks are able to comply with the global liquidity rules in a way that appropriately acknowledges Australia's low government debt.
17 December 2010