Australia mustn't jump the gun on macro-prudential policy

The effectiveness of macro-prudential policy in regulating financial systems has yet to be quantified, and the Murray Inquiry is right to advise that the RBA and APRA tread with caution.

The Financial System Inquiry’s interim report recognised that the Reserve Bank and the Australian Prudential Regulatory Authority have considerable scope to manage risks to financial stability without greater reliance on so-called macro-prudential policies. It noted that the effectiveness of such measures is not well established and that there are practical difficulties in their implementation. The inquiry largely echoes the views of the Reserve Bank and other Australian regulators on this issue.


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