The head of the Reserve Bank of Australia says efforts must be made to ensure post-global financial crisis reforms are implemented.
Since 2008, the Group of 20 nations has agreed on a series of banking and financial reforms in an effort to prevent another financial crisis.
RBA governor Glenn Stevens said good progress has been made, but there remains a lot of work to do.
‘‘In my view, having developed a very substantial pipeline of work since 2008, our energies need now to be devoted to careful and systematic implementation of the already agreed reforms,’’ he said. ‘‘Let me be clear this is not a call for current reform efforts to stop, or to be watered down.
‘‘It is about ensuring we focus our finite energies and resources on the most important problems, and getting industry to do the same.’’
Mr Stevens said the most important reforms are the Basel III international banking rules.
Among other things, they require banks to have sufficient high-quality assets, such as government bonds, which they can sell when funds are needed.
Other significant measures, Mr Stevens said, are the oversight of institutions outside normal banking regulations, known as shadow banking, and addressing the problem of institutions that are ‘‘too big to fail’’.
The RBA governor acknowledged that it is a big task for regulators and industry players, but a task worth taking up.
‘‘We need to avoid reform fatigue, and to sustain our support to those doing the hard grind of devising the new rules and making them work,’’ Mr Stevens told an Australian-British Chamber of Commerce Business lunch in Sydney.
His comments echo remarks made overnight by the Bank of England’s outgoing deputy governor.
Paul Tucker said it would be ‘‘absolutely disastrous’’ if banks were again allowed to be financially fragile through lack of oversight and regulation.
‘‘I think securities regulators around the world just need to up their game on their oversight of non-banks,’’ he told London’s Financial Times.
‘‘The west is in the course of repairing itself from the past crisis; the western world needs to be very careful that it doesn’t brew another one.’’