Question

Describe the changes that have taken place in the structure of the Australian financial system over the past 30 years (in terms of the relative size and importance of each category of financial institution).  Why do you think some of these changes have occurred? (You do not need to quote specific percentages – just indicate which categories have increased or decreased in importance.)

Summarise the main recommendations of the Wallis Inquiry into Australia’s financial system, and describe the changes that have taken place in Australia’s regulatory system as a result of the inquiry.

Describe how an ADI determines the optimal mix of liabilities, and the strategies it can employ to attract both deposit and non?deposit funding.

Answer 1

The Wallis Enquiry is one of the most important milestones in the Australian financial system. The name of the report is attributed to Stan Wallis, who produced this report and is officially known as Final Report of the Financial System Inquiry. The report recommended dual authority system where one regulator oversees the entities requiring prudential regulation while other regulator holds the responsibility of market and disclosure regulation. Consequently, Australia has the Australian Prudential Regulatory Authority (APRA) and the Australian Securities and Investments Commission (ASIC). The report also led to the changes in financial payment system.