Former APRA insider skewers RBA on financial stability

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By Leith van Onselen

Following on from yesterday’s dubious rebuttal of macroprudential tools by the Reserve Bank of Australia’s (RBA) Head of Financial Stability, Luci Ellis, please find below an interesting Q&A exchange between the former head of research at the Australian Prudential Regulatory Authority (APRA) and Ms Ellis, whereby the former APRA insider questions Ms Ellis’ claim that APRA and the RBA were aware of any systemic risks in the lead-up to the Global Financial Crisis:

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The above revelations are important because the crux of Ms Ellis’ speech yesterday was that macroprudential tools are not required in Australia because Australia’s financial regulators monitor risks closely, and are well placed to respond accordingly if and when the need arises.

Clearly, there remains a strong case for macroprudential tools in Australia. Big, dumb rules remain the best regulation.

Twitter: Leith van Onselen. He is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.