Australia: Financial Sector Assessment Program-Technical Note-Bank Resolution and Crisis Management

February 21, 2019

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Format: Chicago

Australia: Financial Sector Assessment Program-Technical Note-Bank Resolution and Crisis Management, (USA: International Monetary Fund, 2019) accessed November 8, 2024

Summary

This technical note analyzes the existing legal and institutional frameworks in Australia, including coordination arrangements and focuses on crisis preparedness, including recovery and resolution planning as well as the Reserve Bank of Australia’s (RBA) lender-of-last resort functions. The analysis highlights that Australia has a well-established framework for financial stability, surveillance and policy formulation and the resolution regime for financial institutions has been significantly enhanced since the financial crisis. Australian Prudential Regulation Authority (APRA) has made progress in developing recovery planning requirements for the banking industry, extending these from large to medium sized and smaller banks. However, there is a need to better integrate the recovery planning within the risk management framework and operational testing exercises and to significantly enhance APRA’s work on resolution planning, particularly for the largest banks. The paper recommends that the Australian authorities should introduce an ex-ante funded deposit insurance scheme, based on best international practice.

Subject: Bank resolution, Bank resolution framework, Banking, Crisis management, Crisis resolution, Financial crises

Keywords: APRA direction power, APRA power, APRA's risk assessment model, Australia and New Zealand, Bank distress, Bank resolution, Bank resolution framework, Banking sector, Bridge bank, CR, Crisis management, Crisis resolution, Enforcement function, Financial system, Global, Holding company, Introduced bank levy, ISCR, Particular focus, Problem bank, R&E team, Resolution framework, Resolution modality, Risk management framework, Transfer power

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2019/048
Stock No:

1AUSEA2019001
ISBN:

9781484398845
ISSN:

1934-7685

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