Quarterly Statement by the Council of Financial Regulators – March 2020
The Council of Financial Regulators (the Council) has been meeting frequently in recent weeks and will continue to do so for the foreseeable future. It held its regular quarterly meeting on Friday 20 March. The Australian Treasurer and the Australian Office of Financial Management (AOFM) attended for part of the meeting.
The main issue on the Council's agenda was the coordinated response to the coronavirus (COVID-19). COVID-19 poses a major challenge to the Australian economy. To support the economy, it is crucial that over the coming months the financial system remains stable and resilient and that markets are open and orderly. Council agencies and the Government have been working hard to achieve this and will continue to do so. The Council discussed market developments, operational readiness of institutions, measures taken both domestically and internationally, possible pathways and contingencies. The Council also discussed the need for continued close engagement with international regulators.
In this context the Reserve Bank has announced extensive measures to provide liquidity to financial markets and to support the banking system in providing credit to businesses. APRA has announced temporary changes to its expectations on bank capital ratios to ensure banks are well positioned to continue to provide credit to the economy. ASIC has introduced measures to ensure the equity market remains effective and resilient, requiring its participants to manage transaction volumes. ASIC continues to monitor the performance of markets and financial market infrastructures. APRA and ASIC indicated that they would shortly announce further plans to reprioritise their regulatory work and reduce the regulatory burden facing institutions in this difficult time.
Council members, the Government and the banking sector have been cooperating extensively on measures to address the impact of COVID-19 on the economy. Members welcomed the package to assist small businesses that had been announced by the Australian Banking Association on the morning of the meeting. The package adds to the substantial measures announced by the Government to support businesses and households through these challenging times. To further this cooperation, Council members and a representative of the Australian Financial Complaints Authority (AFCA) met with the CEOs and CROs of the major lenders in the afternoon to discuss further ways in which the banking sector could support continued flow of credit to the economy.
Members also discussed a number of policy issues not directly related to the coronavirus. These included the outcome of the Council's public consultation on Financial Market Infrastructure Regulatory Reforms. The proposed reforms will provide new powers to resolve a distressed domestic clearing and settlement facility and streamline regulators' supervisory powers. The Council will advise the Government of its updated reform proposals, to assist with policy design. The Council also approved a framework for testing the strength of institutions' cyber resilience, which will include a pilot. Finally, the Council agreed to work with the Australian Competition and Consumer Commission (ACCC) and state regulators to review elements of the regulatory framework for e-conveyancing systems, with a view to promoting financial stability, resilience and competition.
Council of Financial Regulators
The Council of Financial Regulators (the Council) is the coordinating body for Australia's main financial regulatory agencies. There are four members: the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the Australian Treasury and the Reserve Bank of Australia (RBA). The Reserve Bank Governor chairs the Council and the RBA provides secretariat support. It is a non-statutory body, without regulatory or policy decision-making powers. Those powers reside with its members. The Council's objectives are to promote stability of the Australian financial system and support effective and efficient regulation by Australia's financial regulatory agencies. In doing so, the Council recognises the benefits of a competitive, efficient and fair financial system. The Council operates as a forum for cooperation and coordination among member agencies. It meets each quarter, or more often if required.