SYDNEY (AFP) – An inquiry into Australia’s financial system in a report released Sunday recommended domestic banks hold more capital to be “unquestionably strong on a global basis”, while protecting the economy and taxpayers from collapses.
The inquiry, the first major investigation into the sector since 1997, drew on the lessons of the global economic crisis and set out a “blueprint to guide the financial system over the next decade”, its chairman David Murray said.
“Our charge is to do what is right to strengthen the Australian economy and ensure that the financial system is as robust as it can be,” said Treasurer (finance minister) Joe Hockey.
“Now we have got to weigh up carefully the implications for financial services providers. But I want to emphasise we need to prepare now for the challenges that may lie ahead.”
The 350-page report made 44 recommendations, including higher reserve requirements for banks, lower fees for the growing A$1.8 trillion ($1.7 trillion) superannuation – or pension – sector, and caps on credit card surcharges and fees.
The push to raise capital buffers has been echoed by international regulators and aims to address weaknesses that emerged during the 2007-2008 financial crisis.
The report also recommended that banks lift their “risk weights” for mortgage lending, which would require them to set aside higher sums against home loans. Higher risk weights already apply to smaller lenders.