RBA和APRA描述
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FIN 1103 Financial Market S6 2011
Student Name: Ma Shengche
Student ID: 0061013934
Due Date: 11 November 2011
Words count: 1493 words
I. Functions of the Reserve Bank of Australia (RBA)
As Australia‟s central bank, the Reserve Bank of Australia has the responsibility of providing
services to the Government as well as other banks and institutions. It is one of three main
financial regulators that aim to promote the financial system‟s stability, efficiency and
reliably.
The Reserve Bank Act 1959 described that the RBA has two boards. Function of Reserve
Bank Board is to establish and implements monetary policy to maintain a stable financial
system and issues the nation‟s currency. Function of Payment System Board is to regulate the
payment system in order to control risk, promote efficiency and competition.
The RBA has the function to promulgate proper monetary policy, with the objectives of
stabilizing the currency, employment rate and economic prosperity. Its monetary policy
establishes through adjusting cash rate. Cash rate determines the interest rate among
commercial banks. In addition, it will influence inflation rate, as well as the economic vitality
(the RBA, 2011). A given example is in 1997, Australian Dollar fell rapidly. The RBA
interfered in all aspects of financial market to restrain the falling. They sold reserved foreign
currency and bought Australian Dollar. In the meanwhile, RBA stopped buying foreign
currency for the Government of Australia with the purpose of counteracting the influences of
interferences. The exchange rate of Australian Dollar finally went up. Changes in the cash
rate will affect the savings and investment behavior of individuals and businesses. All of that
will adjust the inflation rate to an expected one. For inflation rate changes, price of goods and GDP will follow to change.
As far as the payment system, the RBA is responsible for controlling risk, promoting the
efficiency and competition in the market for payment services, consistent with the overall
stability of the financial system. The payment system is divided into wholesale and retail
payment orders. The RBA has the function to regulate and settle transactions. The RBA
united some card system company like Visa and MasterCard, to economize timing of citizens.
For example, Australian citizens have 9 ways to pay the phone bill (Wang, 2003). In addition,
the RBA provides facilities for final settlement of payment system obligation.
As the government‟s banker, the RBA is responsible for issuing banknote. In some ways,
central bank issues banknote to control the economy. If the RBA decreases the reserve
requirement ratio, it will induce the increasing in money supply in the market. Inflation may
happen.
II. Functions of the Australian Prudential Regulatory Authority (APRA)
Established on 1 July 1998, the Australian Prudential Regulation Authority has the rights to
supervise the financial institutions. The APRA aims to ensure that the financial institutions
are matching with a stable financial market.
Firstly, the APRA issues operating licenses to the entity. Deposit-taking institutions are
regulated by the APRA under a single licensing regime. Domestic and Foreign financial
institutions can apply to become a deposit-taking institutions if they meet the licensing
standards. Licensing for institutions can operate financial market effectively. It restrains
financial institutions to manage legally.
Secondly, the APRA enforces prudential supervision of deposit-taking institutions, insurance,
superannuation and friendly societies. The RBA, insurance and pensions committee and
state-related regulatory authority supervise the financial market separately before supervision of the APRA. The advent of the APRA alters the method from decentralization to
centralization. The benefit of centralization is that APRA integrates the standards of
supervision; the same standard provides coherence for the process of supervision. Based on
Banking Act 1959, Insurance Act 1973 and Australian Prudential Regulation Authority Act
1998, the APRA acts more cautious according to the Law and enhances the prudential
regulatory efficiency and quantity (the APRA, 2011).
In the meanwhile, financial institutions themselves regularize their daily transactions and
performances, keeping balance of financial safety and efficiency. The APRA strengthens the
public‟s confidence for financial institutions. They regulate the unfair treatment happened in
banks, insurances, superannuation and so on. To some extents, this supervision protects the
customer. For instance, the APRA required CBA, Westpac, NBA and ANZ draft a plan to