financial deregulation in Australia Monetary Policy

1
financial deregulation in Australia Monetary
Policy the Australian Economy from 1980 to 1990

• Kristoffer Francis
• 11306806
• Macroeconomics
• 09/09/08

2
Deregulation.

• Remove Restrictions to encourage operations in
  private markets.
• Less regulation gt more competition gt more
  productivity gt more efficiency gt cheaper products
• Started in 1970s in America with Australia soon
  to follow.

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Deregulation Theory

• University of Chicago
• Researchers Ludwig von Mises, Frierich von
  Hayek and Milton Friedman
• Jimmy Carter, Richard Nixon and Gerald Ford

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Australian Financial Controls before deregulation

• Authorities manage the monetary economy
• Create a captive market for government securities
• Limit the risks that banks could take
• Allocate credit to areas of the economy that
  authorities thought should get priority
• Maintain a stable exchange rate and prevent the
  flow of domestic savings offshore.

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Affected Monetary Policy

• The process through governments, a central bank
  or another type of monetary authority of a
  country controls the supply of money.

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The Need for Change

• Banks Losing Financial Position in the market.
• Down 30 over the last 30 years.
• New Unregulated Intermediaries.
• International Pressures
• Financial System wasnt efficient.

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Minimum Effective Regulation

• Bob Hawke Announced Minimum Effective Regulation
  Policy.
• This policy has established regulatory gate
  keeping' institutions to enforce a quality
  hurdle for all new regulation.

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Slow Change

• Government Needed Convincing. Legislation stood
  in the way.
• 1973 Tiny Change Results in Snowball effect over
  the next 13 years resultingin complete freedom
  of banks.
• Strengthened Economy and Improved Financial
  Sector.

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The Australian Economy History of the 1980-1990s

• 70s and 80s Australia experienced high
  inflation and high unemployment.
• Falling behind as asian economy booms. (Asian
  economy ultimately crashes and then were ok
  again)
• Hard depressions in 1981 1989/90 compared to
  neighbours.
• Economy shifting focus from import substitution
  industrialization to export-driven, high-tech
  globalisation.

10

• Recession in 1990, quickly recovered due to
  expansion in 1991s due to technological boom.
• Rising consumption and higher export demand,
  unemployment continued to drop well into the
  2000s.

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Future Uncertain?Economic Crisis of Today

• World Economy Down the Toilet.
• Demand for more Regulation.
• How will Australia fair?

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Refrences

• Jackson McIver Macroeconomics
• Reserve Bank of Australia
• Australian Bureau of Statistics
• Department of Finance and Deregulation
• Fane, G., ECONOMIC REFORM AND DEREGULATION IN
  AUSTRALIA, (1994) Australian National University.