Regulating Australia's financial stability in the national interest

Given the importance of financial stability to Australia, it seems somewhat surprising that the Australian Parliament has not fully and clearly utilised its available regulatory tools to mandate and empower the Reserve Bank of Australia (RBA) with the overarching responsibility for financial stability. This chapter argues that financial stability is a national interest of Australia, and that both persistent and new threats to financial stability warrant appropriate regulatory action by the Australian government. This chapter briefly outlines Australia's current regulatory architecture for financial stability. It concludes that the current regulatory framework in Australia, addressing in particular the responsibility and accountability of the RBA for financial stability, should be clarified.