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Banking industry seeks regulation changes

Staff Reporter 3 minute read

By: Staff Reporter

The Australian Bankers' Association is seeking amendments to the new banking regulations imposed by the Basel Committee.

According to an article in the Australian Financial Review, Australian regulators are seeking changes to the Basel draft in at least two key areas.

One key part of the rules requires banks to keep sufficient assets in a saleable liquid form to meet withdrawals during a 30-day panic on markets.

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This poses a problem, because there are far less government bonds on issue than in other countries and certainly not enough for the banks to meet the Basel requirements.

The other problem area concerns the additional test of liquidity known as a ‘structural funding’ limit.

Banks with many illiquid assets will be deemed riskier and required to source more stable funding, or long term funding – forcing many Australian banks to cut their reliance on short term borrowing and placing pressure on them to securitise their mortgage loan book.

Banking industry seeks regulation changes
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