Banking and Finance - LS334

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Table of Contents

Introduction1

Question 11

Question 25

Conclusion7

References9

Banking and Finance - LS334

Introduction

The financial system plays a central role in the operation and development of the economy. It consists mainly of different financial intermediaries and markets, through which a variety of instruments mobilize savings into more productive uses. Banks are financial intermediaries perhaps best known, as they offer their services directly to the public and form the core of the payment system. However, financial system involves many intermediaries and other organizations that offer valuable services to society.

A stable financial system is efficient, competitive, innovative and potential to raise the sustained economic growth and welfare of the population. To achieve these objectives it is essential to have a strong institutional framework and financial regulation and supervision to safeguard the integrity of the system and protect the public interest. Therefore, the government of Australia has one of the purposes, i.e., to promote the healthy development of the financial system.

In this paper, we will be discussing the Corporation Act 2011 in Australia regarding the law of banking and financial services and the obligations of financial service licensees. In addition, a case has been discussed to understand the role of negotiations and its law regarding the banking and financial services act.

Question 1

One of the goals undertaken in the Australian banking system reform is to attract to the country of international financial institutions. It is also planned to provide increased competition and further deregulation to allow market banking financial institutions, non-bank licenses. In addition, the Finance Ministry proposed to reform the country's supervisors. Despite the objections of the Reserve Bank of Australia, who did not want to go to reduce their authority, the commission was formed Australian Prudential supervisory oversight functions endowed with the entire financial sector, including the banks. This decision was due to the fact that the earlier construction companies, credit cooperatives, pension funds and banks operating in the individual states were Reserve Bank of Australia, and absence of effective controls has led to an increase in the number of bankruptcies these institutions and investors lose their money. Component of the reform of the country's financial system is abolition of the Reserve Bank of Australia guarantees on bank deposits. Australia and New Zealand are the only countries with members of the Organization for Economic Cooperation and development, in which bank deposits are not insured. Here among investors is widely believed that in case of bankruptcy a bank someone may have the government return money to customers.

Under current law, The Central Bank of Australia stands guard over the interests of depositors, putting them in the first place in the queue for receiving the amounts remaining in event of liquidation of the bursting of the bank. The legislation also empowers the Central Bank the right, but not the obligation to rescue banks from bankruptcy. The proposed Reserve Bank of Australia, the introduction of deposit insurance led to criticism from many Australian ...