ROLES/IMPACT of RBA, APRA and ASIC (1 Viewer)

[atakach99]

recently ive been interested in what the Reserve Bank of Australia actually does. I've heard the name loads of times, along with Australian Prudential Regulatory Authority (APRA) and ASIC but never actually understood what they do. Could someone please explain what these institutions actually do, and what their role and impact is in Australian Finance/Financial Markets.

Especially with APRA and ASIC - i dont really understand what the difference btwn the two is - like they both overlook companies to ensure that the companies are complying by laws and regulations, but if someone could explain please, and tell me a bit more. Examples might help in understanding with all three of these institutions.

 

[Demandred]

ASIC genearlly deals with the provision of information and compliance with the financial system. APRA help ensures banks do don't anything rash. ACCC deals with general goods markets, most of its powers are listed under the trade practices act, also check out the national competition policy, oh yea, it also reviews mergers and acquisitions. Both are capable of investigating and enforcing regulations through the legal system. APRA ensure stability of the banks and financial institutions so that they won't collapse, it differs from ASIC in that ASIC tries to root out illegal activities or anything that's detrimental against market forces.

ASIC has been quite impotent in ensuring compliance with regulations due to their bureaucratic roles, it coped a lot of flak recently with HIH and a few other collapses (can't remember off the top of my head). ACCC was originally thought to be 'captured' by the market (i will let you find out what that means), but since the Hilmer report, its powers and effectives has increased dramatically. What's so interesting is that there is trend towards 'meta regulation' rather than the brute force approach in ensuring compliance with regulations.

 

[atakach99]

I have done some research through google but am still confused a bit. If it isn't too much trouble can you please write out that explanation, I would really appreciate it.
Thanks a lot in advance

 

[Demandred]

Historically, many that has worked for the ACCC has also worked for the private sector and the very firms it aims to regulate, what happened before 1993 (off the top of my head) was that ACCC was heavily influenced and directed by ex-private sector CEOs, so basically it was working for the enemy. The TPA and the Hilmer reforms changed everything and turned the ACCC into a force to feared.

ACCC has now turned to 'meta regulation', direct regulation and basically challanging any firm which breaks the market laws is very very expensive, and inefficient. ACCC works with the firms to ensure market forces are complied with, this involves heavy use of media and publicity to pressure firms to comply, you'll also find that much of the ACCC resources are diverted to educate firms about what you can or can't do in the market. As for larger firms, the threat of legal action is often more costly than compliance, so therefore what happens is that the ACCC boss invites the CEO of firm in question for a glass of wine, and insinuates that the firm should comply less they face costly legal battle (this was coming from a professor who actually witnessed firm hand). And lastly, self regulation, ACCC helps certain sectors to set up their own review boards and regulatory body to ensure compliance with market laws - Bar Association for example.

Well to say again in a nut shell:

ACCC: ensures regulation and compliance with the laws of the market and the trade practices act within general goods sector
ASIC: ensures regulation and compliance with laws of the market within the finance sector, they also have the role of dissemiating information and publish reports and bueaucratic roles
APRA: ensures regulation and compliance to ensure stability of financial institutions, it ensures people have faith and confidence that their savings are protected and prudentialy used. One of the main role of APRA is to ensure no one loses all their saivngs in the banks, another is to stop people from all of a sudden withdrawing their money from their accounts which is like an economic doomsday bomb. poof.

 

[atakach99]

OK thanks a lot but i have one last question i am struggling to answer... What is the impact of these regulatory institutions (RBA, APRA, ASIC) on the operation of finance markets?

 

[haiderr]

Hi,

i came accross a question very similar to this, and i havnt been doing economics for too long, so i dont really understand what the "MONETARY POLICY" is...

could someone please explain.

Your help is much appreciated!
thnx

 

[sahilbareja]

ali nd haider oreadii ere......HAHA
here u go


RBA :

• Australia’s Central Bank.Confers on the Reserve Bank act 1959 .
• Owned by the Commonwealth ,although itz not a govt. department
• Main responsibility is monetary policy .

[FONT=&quot]Other roles are maintaining financial system stable and promoting safety and efficiency of the payments system of the government[/FONT]

 

[haiderr]

ali nd haider oreadii ere......HAHA
here u go


RBA :

• Australia’s Central Bank.Confers on the Reserve Bank act 1959 .
• Owned by the Commonwealth ,although itz not a govt. department
• Main responsibility is monetary policy .

[FONT=&quot]Other roles are maintaining financial system stable and promoting safety and efficiency of the payments system of the government[/FONT]

Sahil..lol..ur a bit late

yes we were expecting a reply, but not from someone who finishes their HSC in 2009, technically that means ur in year 10 rite now. lol...

btw, THANKS for your help!

 

[Conspirocy]

if they ever ask that question, every person in nsw will kick themselves for not studying it