FourFour Two: The best news stories of the month are here, as we analyse the week’s top stories.
Read moreThe story of Australia’s summer is one of unprecedented instability, with Australia’s stock market falling, the economy contracting and its biggest banks forced to scale back lending.
The fallout has seen the Reserve Bank of Australia cut interest rates from their highest in a decade to 2.25 per cent, and its governor has been under pressure to act decisively.
The government has promised to provide an additional $500 million for the Reserve Banks, which have been stretched as they struggle to make up for a shortfall in their own borrowing capacity.
And in another blow, a Senate committee has called on the Government to release a comprehensive review of the banking sector, amid fears that the Government has not done enough to ensure the safety of financial institutions.
There is no easy answer for the financial crisis, but in an attempt to address some of the issues, the Reserve Board has appointed the Financial Review Committee to look at the banks and the financial system.
It has already recommended a range of changes to make the banking system safer, but this report is a much bigger effort.
The Government has responded by announcing the creation of a new body called the Financial Stability Authority (FSA), to be chaired by a former senior Bank of England governor.
This body will review the banks’ governance, risk management and governance practices.
According to the Government, the new body will include experts from across the financial sector, as well as academics and academics from other disciplines.
They will be able to share their views on how to best protect financial institutions from the risks of the financial market, and how to better support businesses in the event of an economic downturn.
We can expect a lot more discussion of the role of the Federal Reserve in the coming months.
One of the major issues for the FSA will be how to manage a country that has an enormous amount of money.
The Australian dollar has fallen sharply in the past few months, and the government has cut the value of the Reserve’s currency against the dollar by 50 per cent.
In response, the Bank of New Zealand has cut its rates to the lowest in years.
With a currency peg in place, Australia’s currency has been effectively floating on a US dollar.
This is a dangerous position, with the Bank in particular worried about a possible collapse of the US dollar, and a possible decline in the value and exchange rates of the Australian dollar.
As a result, the FSF will be tasked with developing a set of guidelines for the use of the national currency in Australia.
While the FSR is expected to have significant powers, its role is limited.
But the FSS is not the only body that is being asked to do more.
The Reserve Bank is also looking at ways to help the banks that are not currently regulated by the Reserve System, including issuing new loans and issuing equity in the banking industry.
For the first time, the Government will have to commit to the use and sustainability of capital markets for financial institutions, and this will have major implications for the Australian economy.
Despite all of this, there are also signs that the economic situation is improving.
Australia has now overtaken China as the second largest economy in the world.
China’s economy is expanding at a healthy rate, with annual growth of 6.4 per cent in the first quarter.
Since the beginning of the year, the number of Australian jobs in the financial services industry has grown at an annual rate of 8.2 per cent – almost triple the rate of growth for the economy as a whole.
A stronger dollar will have a huge impact on the Australian housing market, which is in crisis.
Even though the Reserve and the FSB have had to impose a range from quantitative easing to asset purchases, the impact of a weaker currency on the housing market has been relatively mild, with average house prices rising by just over $300,000.
On the other hand, the unemployment rate in Australia is currently the highest in the developed world.
According to the Australian Bureau of Statistics, about 17 per cent of Australians are out of work.
Looking ahead, it is unclear whether the Government can continue to push the Reserve into a deeper recession.
During the last financial crisis in 2008, the Federal Government tried to rescue the banking and credit sector by introducing capital controls, and then the Reserve used that opportunity to launch quantitative easing, which has had a huge effect on the economy.
It is now expected that the Reserve will again try to save the banking business in the future.