In principle, the increasing global integration of financial markets, by reducing the scope for individual central banks to control domestic interest rates, could hamper the ability of monetary policy to stabilize prices and economic activity.
From an Australian perspective, these avenues should provide an opportunity for Australian banks, asset managers and their clients to increase their exposure to the Chinese domestic financial market. Australian international portfolio investment has been growing strongly over recent years from around $ billion in 2010 to over $ billion at the end of 2014 (Graph 3).