World envies strong bank regulation here: PM
PRIME Minister Julia Gillard says Australian regulators have told her the country's banks have no exposure to the government debt pile crippling Greece and "negligible" exposure to other risky European sovereign debt.
PRIME Minister Julia Gillard says Australian regulators have told her the country's banks have no exposure to the government debt pile crippling Greece and "negligible" exposure to other risky European sovereign debt.Speaking at a lunch in Melbourne yesterday, Ms Gillard said the European debt crisis and the prospect of a downturn in the US were "cause for concern" and she urged governments to take "swift and credible action" to restore confidence.Hopes that fallout from the Greek debt crisis can be minimised, possibly through an orderly default, sent the benchmark S&P/ASX 200 Index soaring yesterday to close up by 3.6 per cent.Mining stocks were at the forefront of the recovery from last week's two-year record low, led by a surge in the price of gold.Ms Gillard said Australia's bank regulatory system was "the envy of the world" and had been made even stronger since the global financial crisis."Australia is not immune from the world, but we are strong in the world," she said."I would not swap our economic position for that of any other country."The latest data from our regulatory authorities indicates our banks have negligible direct exposures to peripheral European sovereign debt and our advice is there is no Australian bank exposure to Greek public debt."They also have low exposures to European banks and other borrowers that might be affected immediately by a major financial shock in Europe, below 2 per cent of total assets."Figures released by the Bank of International Settlements last week showed that Australian banks cut lending to European countries in the March quarter, pulling out of the vulnerable Spanish economy but increasing lending to Italy, which is also considered at risk.Ms Gillard said that despite the measures already in place to address the European debt crisis, "sentiment has deteriorated" and investors were also concerned about the prospects of the US economy recovering."In this way, events in the northern hemisphere are conspiring to create a more uncertain outlook," she said."Restoring sustainability to European public finances will take years, so while that long-term repair begins, we need to see solutions emerging to restore the confidence that markets need."The time for governments to act is now."