APRA is the regulator of institutions – it supervises the banks, sets prudential standards and holds a wide range of directive and resolution powers. The RBA is the liquidity provider to the financial system, it has regulatory powers of its own in respect of clearing and settlement facilities and the payments system, and it incorporates financial stability assessments in its monetary policy decision process.
Both agencies have a mandate for macro financial stability, though obviously APRA has the more specific mandate for risk management at the level of the individual institution. With that background I want to ask two questions about the design and conduct of macroprudential policy arrangements in general. 1.