Outline the main changes to the regulation of Australian banks since the Global Financial Crisis (GFC). In what ways have these changes followed from the nature of the Crisis and the lessons learned...

THE CHALLENGES FACED BY THE AUSTRALIAN BANKING SYSTEM AFTER THE GLOBAL FINANCIAL CRISIS IN THE YEAR 2008
ABSTRACT :
In this short analysis of the Challenges faced by the Australian bank post the Global Financial Crisis, we have seen the main changes to the regulation of Australian banks since the Global Financial Crisis (GFC) and in what ways have these changes followed from the nature of the Crisis and the lessons learned from the Crisis by the international regulatory community. Also, evaluating the degree of changes that have been made to Australia's system of bank regulation, and whether more needs to be done to reduce the likelihood that an event like the GFC could originate in this country, and damage the wider Australian economy. This report observes the changes to Australian prudential bank regulation after the Global Financial Crisis and then to evaluate it. One of the embedded requirements in this report will be developing a picture of the extent to which the main changes have co
ectly responded to the GFC. One of the big conceptual developments since the GFC is in the idea of macro-prudential regulation.
KEYWORDS:
Australian Banking System, Global Financial Crisis, monetary policy, recession.
CONTENTS :
1.INTRODUCTION
2. DIFFERENCE BETWEEN FISCAL AND MONETARY POLICY
3. IMPORTANCE OF THE MONETARY POLICY DURING THE GLOBAL FINANCIAL CRISIS
4. ANALYSIS OF THE EFFECTS ON THE AUSTRALIAN BANKING SYSTEM BEFORE AND AFTER THE GLOBAL FINANCIAL CRISIS (GFC) IN 2008-2009 AND EXPLAINING THE STRUCTURAL CHANGES TAKING PLACE IN THE FRAMEWORK OF THE BANKING SYSTEM
5. CONCLUSION
6. REFRENCES
1.INTRODUCTION :
The study of economics is traditionaly divided into micro and macroeconomics. Macroeconomists try to understand how an actual economy operates and on that basis of their understanding, suggests policies that may be adopted to improve the performance of the economy[ S.Sikder, Principles of Macroeconomics]. Macroeconomics deals with some major issues related to the economy.The Great Recession or the Global Financial Crisis which took place during 2008-2009 stimulated due to failure of the world’s largest financial institutions which resulted in huge unemployment and economic distu
ances. The Australian banking system also faced challenges after this financial crisis. There was a trade off between a stable and sound banking system and policies for the adjustments to stimulate the economic activities. [ Dr. Ken Henry AC;The Australian Banking System]. Keeping the economy stable and implementing proper monetary and fiscal policies was a difficult task for the Australian Government during that span of time. Although the whole world economy was shaken by this major crisis, Australian banks emerged in a stronger and better position from the other countries banking system.
There took place some significant changes in the structure of the banking system of Australia post the Global Financial Crisis. These changes can be identified and they are as follows:
1. The first and foremost challenge was the identification of the capacity of the Banks’ to raise and stimulate funding in this kind of volatility and a subdued recovery in the domestic market following after the tremendous disruption worldwide.
2. Fostering a competitive banking environment for consumers of banking services, particularly at the retail level, in an industry that has become more concentrated as a result of the crisis.
3. Implementing the G20’s international regulatory response to the GFC.
These responses were designed to strengthen the global banking sector, learning lessons from the financial crisis. [ Dr. Ken Henry AC;The Australian Banking System].
2. DIFFIRENCE BETWEEN FISCAL AND MONETARY POLICY :
Fiscal policy is an instrument of the government adopted by the Government in order to control and adjust its spending levels and tax rates to monitor and influence the economy. It is the sister strategy to monetary policy through which the Central bank of any country influences the money supply. The main objective of the fiscal policy is to maintain the condition of full employment , economic stability and to stabilize the growth rate.
Fiscal policy is most effective in a recession or a global financial crisis like in 2008-2009, where monetary policy is sometimes insufficient to boost the demand. In a liquidity trap condition, the government pursues expansionary fiscal policy. Due to this the rate of interest rises and the economy falls into recession. In this case, the fiscal policy alone fails to boost the demand , so , in such critical situations, both the fiscal and the monetary policy combines to play the role of saving the economy from the turmoil.
3.IMPORTANCE OF THE MONETARY POLICY DURING THE GLOBAL FINANCIAL CRISIS :
The monetary policy is an instrument of the government adopted by the monetary authority of a country , to be more precise , the Central bank of the country, in order to control the interest rate payable on short term bo
owing or the supply of money. This instrument mainly targets to lower inflation rates , avoid recessions and ensures price stability over the economy. Monetary policy increases the liquidity to create and promote economic growth. Monetary policy can be
oadly classified as an expansionary monetary policy or contractionary monetary policy. It includes tools such as open market operations, direct lending to banks, cash reserve ratio, repurchase or the repo rate and also the bond market.
The global financial crisis that took place in the year 2008-2009, led way for the government of Australia to implement some of these monetary policies in order to save the economy from crashing. The proper implementation of the policies did actually help the Australian economy combat the crisis with little to almost no difficulty. Following this we discuss the...