Improving Australia’s Regulatory Framework for Systemic Financial Stability

29(3) Journal of Banking and Finance Law and Practice (2018): 183-209

Monash University Faculty of Law Legal Studies Research Paper No. 3284956

30 Pages Posted: 9 Dec 2018

See all articles by Steve Kourabas

Steve Kourabas

Monash University - Faculty of Law

Date Written: October 11, 2018

Abstract

Regulatory theory since the global financial crisis (“GFC”) has emphasised the importance of systemic financial stability as a regulatory objective. This has taken the place of pre-GFC reliance on private markets as a primary mechanism to avoid systemic risk combined with a laissez faire approach to public oversight that focused primarily on ensuring the safety and soundness of a pre-defined number of financial institutions.

Several jurisdictions, including the UK, have engaged in significant reform of their financial infrastructure to facilitate regulation in accordance with this change in regulatory theory, including through the creation of financial stability authorities. Importantly, these reforms have provided clarity in regulatory mandate and placed systemic financial stability at the centre of the regulatory framework.

Australian policy-makers and regulators have been less open to engage in similar reforms, arguing that the existing framework is effective. This article argues that there are a number of areas where the Australian approach could be enhanced by regulation that has at its core the promotion of systemic financial stability. The article is of particular important in light of the recent findings of The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The Royal Commission illustrates the need for ongoing review of the Australian financial system, including as it relates to financial stability.

Keywords: Financial Stability, Finance, Royal Commission, Australian Financial Industry

JEL Classification: K22, K23, G21, G28, G38

Suggested Citation

Kourabas, Steve, Improving Australia’s Regulatory Framework for Systemic Financial Stability (October 11, 2018). 29(3) Journal of Banking and Finance Law and Practice (2018): 183-209; Monash University Faculty of Law Legal Studies Research Paper No. 3284956. Available at SSRN: https://ssrn.com/abstract=3284956

Steve Kourabas (Contact Author)

Monash University - Faculty of Law ( email )

Wellington Road
Clayton, Victoria 3800
Australia

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