“Briefly outline the role of 3 current institutions in the regulation of financial markets and discuss the role of the Reserve Bank of Australia in determining the cash rate.”
The Reserve Bank of Australia, the Australian Prudential Regulation Authority and the Australian Securities Investments Commission are three current institutions, which regulate financial markets. Expert regulation results in stable financial markets, which are critical for the function of the economy. Each financial market regulator has specific responsibilities for the regulation and supervision of the financial system. The Reserve Bank of Australia plays a key role in determining the cash rate. The cash rate is influenced by domestic market operations, which are actions by the Reserve Bank in the short-term money market to buy and sell securities. RBA’s role is crucial as it controls the rate of inflation, whilst encouraging economic growth.
The Reserve Bank of Australia is Australia’s central bank. It has the role of controlling the country’s money and banking system. Its main functions are to conduct monetary policy on behalf of the government, as well as working to maintain a strong and stable financial system. Monetary policy is the most important ongoing responsibility of the Reserve Bank, conducting monetary policy to target a sustained low inflation rate. Also, the RBA controls the issuing of the Australian currency, is responsible for the regulation of the payments system, is a banker to the banks, manages Australia’s gold and foreign exchange reserves, and provides banking and financial agency services to the government.
The Australian Prudential Regulation Authority (APRA) is responsible for prudential supervision and regulation of all of Australia’s authorised deposit-taking institutions, life and general insurance organisations, friendly societies and superannuation funds. APRA has two main regulatory roles. It promotes safe and sound business behaviour and risk...