Powered by MOMENTUM MEDIA
subscribe to our newsletter

ABA calls for greater diversity of funding

In its submission to the Financial System Inquiry (FSI), the Australian Bankers’ Association Inc. (ABA) has called for the government to support diverse funding sources and the development of the domestic debt capital market.

The ABA submission identifies funding of the Australian economy, including through the banking system, as a critical issue where a clear strategy needs to be developed.

ABA chief executive Steven Münchenberg said the financial crisis showed that funding can be vulnerable.

“While markets are adaptive and resilient, it would be prudent to ensure Australia has a clear plan for ensuring the economy and banks have access to as diverse a range of stable funding sources as possible,” Mr Münchenberg said.

In its submission the ABA said that all banks agree markets are currently competitive, but that the Inquiry should consider proposals to drive more competition, on the merit of the case put forward and consistent with a stable and efficient market.

Advertisement
Advertisement

“A major contributor to competition levels is the availability and price of the funding available to banks,” Mr Münchenberg said.

“Ensuring banks have access to a wide and diverse range of reliable funding sources can help intensify competition,” he said.

Possible impediments identified in the submission include the income tax disadvantages of deposits and other interest earning products relative to other forms of investment, and the proposal to tax savings through a deposit levy, which would make deposits even more costly to banks and decrease their attractiveness to savers and investors.

The submission also notes that the government can play a vital role in the development and expansion of the domestic debt capital market.

“This market is small and underdeveloped in Australia compared to other developed economies, but if deepened and made more liquid it could provide an important source of funding to the Australian economy,” Mr Münchenberg said.

PROMOTED CONTENT


ABA calls for greater diversity of funding
mortgagebusiness

Latest News

Citi is to exit its consumer business, including mortgages, loans, retail banking and credit card operations, in Australia and 12 other ...

The major bank’s CEO has reiterated that responsible lending changes could simplify the lender’s processes and improve mortgage approv...

The non-major has reported growth in housing lending as well as a rise in home loan settlements via the broker channel. ...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: Tackling the home deposit challenge

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.