Thursday, 28 March 2013

RBA speaks Chinese, happy outlook

Before you worry that RBA bank governor has availed himself of Mandarin or Cantonese, fear not as this post relates to RBA policies and announcements.  This blog has been advocating for a while that, possibly owing to great trade flows, the RBA has chosen to throw its lot very much in with its biggest trade partner and not join the currency war (or even talk about the currency war).  The RBA is in denial, about the need for radical banking regulatory overhaul, the need to recognise the high AUD is hollowing out the economy and the failure to recognise the rapid end of the mining boom.

Recent announcements on this point that banking reform had gone too far (or would shortly go too far) were made this week by APRA and the RBA- ironically as Australia is one of the first to abandon interest rate quotes for fixings in favour of actual trades following the LIBOR scandal.

So perhaps even more ironically to discover today that this argument is doing the rounds in respect of China's weaker banks.  The Chinese banking sector is a constant battleground between entrenched state owned enterprise interests and reformers:

...The China Banking Regulatory Commission’s decision Wednesday to tighten rules covering increasingly popular wealth-management products ....Although bank stocks were getting slammed on Thursday – with small- and medium-sized lenders hit much harder than the Big Four ...Analysts at Barclays said the larger lenders could be less impacted by the CBRC regulations, given that their exposure to wealth-management products is lower as a percentage of total assets... (here).

Will Australia want to be joined up with Chinese financial policy for much longer?

No comments:

Post a Comment