Defined Terms and Documents       

Particulars of deregulations and subsequent re-regulations are well chronicled herein:

*          Financial Institutions Collapses  -  Australia

*         ABC website, 'Australian Banking History'

Since 1911 Australia's 'central bank' heavily regulated Australian banks until implementation of the Campbell Committee recommendations in the early '80s. Historically when de-regulation resulted in adverse consequences, re-regulation ensued

Below are two extracts from Australia's Experience with Financial Deregulation  Ric Battellino, Deputy Governor, RBA  Address to China Australia Governance Program, Melbourne – 16 July 2007:

"Reasons for Change

Why did Australia move away from this system? I think there are four broad reasons.

·           First, being heavily focused on banks, the controls were weakening the position of banks and hampering their ability to respond to customer needs. Banks were rapidly losing market share in the financial system; by the early 1980s their share had fallen to 40 per cent, compared with 70 per cent in the early 1950s.

·           Second, the controls were becoming ineffective, as new, unregulated, intermediaries sprung up to provide finance.

·           Third, the increase in international capital flows following the breakdown of the Bretton Woods arrangements began to put pressure on the Australian dollar exchange rate. The authorities could stabilise the exchange rate only by engaging in large foreign exchange transactions, which in turn made it difficult to manage domestic liquidity and domestic financial conditions more generally.

·           Fourth, the financial system was quite inefficient, with wide interest spreads, little innovation and many creditworthy potential borrowers unable to get access to credit."

    "The early moves towards deregulation were tentative. There was an alternative school of thought that the problems with the controls in place could be overcome simply by extending their range and reach. For example, legislation was prepared to extend controls to the new non-bank intermediaries which were springing up because of the controls on banks. This legislation was never proclaimed, however, as the intellectual drive towards deregulation eventually dominated."