In addition, the wider range of instruments being traded and held in bank portfolios meant that, not only could an institution’s exposure to market risks change dramatically from day-to-day (or even hour-tohour), but there were growing operational risks related to the difficulties of controlling a complex portfolio. This approach envisaged the supervisor standing back from individual transactions and loans.
The net effect of all these forces is such that Australia’s trading partners as a group is likely to record below average growth in 2008, reflecting weak outcomes in the developed world, and slower but still pretty good growth in Asia.