The Uneasy Mandate of the Reserve Bank of Australia for Financial Stability: Challenges for Governance and Accountability.

Student thesis: Doctoral Thesis


This thesis argues for the reform of the regulatory framework of the Reserve Bank of Australia (RBA) for its financial stability responsibility. The mandate of the RBA for financial stability is an uneasy mandate, being both informal, but also decentralized and shared. It therefore creates challenges for the governance and accountability of the RBA as the regulator with the ultimate overall responsibility for financial stability in Australia. The current regulatory framework lacks clarity about the RBA’s responsibility for financial stability. These difficulties are compounded by the elusive nature of the concept of financial stability and the fact that the RBA is a central bank, with a unique character and potentially competing mandates.

A preponderance of soft law regulatory measures control and influence the execution of the RBA’s financial stability mandate. The thesis suggests that the emphasis on soft law regulation results in the regulatory framework being inadequate, with both the RBA and the Australian Government risking the legitimacy and credibility of the RBA in its pursuit of financial stability. As the current measures to ‘regulate the regulator’ are not optimal, this thesis proposes necessary reforms to the regulatory framework. These suggested reforms have a legal focus and reflect emerging international best practice in the regulation of financial stability.

The original contribution to knowledge that this thesis makes is firstly in the detailed critical analysis of the regulatory framework of the RBA’s financial stability obligations and the governance and accountability mechanisms that regulate the RBA as regulator. Secondly, it highlights both the potential problems for the RBA as a central bank with an informally formulated financial stability responsibility and the risks arising from the legal framework for governance and accountability, affecting the RBA's legitimacy and credibility. Finally, the thesis makes a contribution to academic discourse through proposals for improvements to the RBA’s regulatory framework in regard to financial stability and provides the rationales for such improvements.
Date of Award12 Feb 2020
Original languageEnglish
SupervisorMichael Weir (Supervisor) & John H Farrar (Supervisor)

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