What has Australia done? Australia was not as badly affected by the crisis as some other countries. Our banking system overall, though hardly without blemish, stood up fairly well. This was testament to generally sound management in most institutions and a robust supervisory approach.
Often supervisors are dealing with yesterday’s problem rather than the one that is emerging today. What we should aim to do is to harness and reinforce market disciplines to achieve the outcome we are seeking – a sound and efficient financial system. Bank directors and management have a detailed knowledge of their bank’s business.