While Cameron Clyne is calling for an open inquiry into how to address Australia’s offshore funding vulnerability, our chief bank regulator is yet to get the memo, maintaining its secretive and discretionary approach to supervision. From Banking Day today:
The Australian Prudential Regulation Authority has published a guidance note on how the financial stability policy framework will apply in Australia, which suggests the regulator may cloak its use of macroprudential policy in the established garb of regulatory practice.
APRA will rely on the established mechanism of unpublished buffers on capital ratios that it presently works out for each bank and deposit-taking entity. APRA does not disclose these ratios.
The regulator said it was committed to adopting the counter-cyclical capital buffer as part of its implementation of the Basel III reforms, but may be doing so “with reservations” (see following article).
APRA said that in doing so it will draw on analysis done by the Reserve Bank, as well as its own prudential observations and analysis.
The regulator said it already “takes an industry-wide, or systemic, perspective, as is consistent with its mandate.”
Two other tools of choice for APRA to enforce a counter-cyclical approach to the determination of bank capital are “more intensive supervision” and engagement with boards over a bank’s risk appetite.
How about some simple LVR measures to work with, eh?
