Essays on Need for Australian Prudential Regulatory Framework, Its Basic Functions Case Study

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The paper 'Need for Australian Prudential Regulatory Framework, Its Basic Functions " is an outstanding example of a finance and accounting case study.   This report focuses on the Australian scenario framework. The report highlights and explains the Australian Prudential Regulation Framework and the reason for developing such a framework with regards to Australian economic scenario. The report highlights the major needs or requirement for the development of Australian Prudential Regulation Authority (APRA) and further, the report highlights the steps taken by Reserve Bank of Australia to fight against the 2008 Global Financial Crisis to ensure minimal damage to the Australian Economic environment both during the face of Global Financial Crisis and the aftermath which such a Global crisis worldwide.

Finally, the report is concluded to throw light and provide a complete understanding of both the theoretical and practical approach of the report under study. 2.0 THE AUSTRALIAN PRUDENTIAL REGULATION FRAMEWORK Prudential regulation frameworks are developed to supervise and lower the risk of community tolerance and ensure mitigating the risk of financial institution insolvency. It is to be noted that insolvency is a perfectly normal occurrence in today’ s competitive environment.

However, when insolvency is related to a financial institution the same is a concern for a country’ s economic scenario and it is important to ensure that the failure does not transmit to other financial participants and the same is resolved at a quicker pace and lower cost (Gruen, 2009). Australia’ s prudential regulation framework is developed to ensure fair dealings in distinct industries which include deposit-taking institutions, life insurance companies, general insurance companies and superannuation funds all of which are established under different legislations. In order to ensure the same Australian Prudential Regulation Authority has been developed which establishes and enforce various prudential norms, regulations, standards and practices and ensure that financial promises made by financial institutions are made in a stable, efficient and competitive manner under all circumstances. The Australian Prudential Regulation Authority is one among the four independent agencies of the Australian Financial System which supervise the individual financial institutions and develop standards and norms to ensure financial stability in the Australian Economic environment.

APRA is funded by levies paid by the various financial institutions which it supervises and has its head office located in Sydney with offices in various other cities of Australia (Gruen, 2009).

The authority collects data to act as a National Statistical Agency for various financial institutions and plays a major role in ensuring The integrity of Australia’ s retirement policy. Ensure that superannuation funds of Australian people are released in a fair and correct manner with limited problems. It administers the financial claims schemes to ensure depositors access their deposit funds in a timely manner and in consequences of the failure of general insurer claims are met in an organized manner (Davis, 2009). It helps in accessing new licensing applications. Keep a track and eye on the soundness of the financial position of various financial institutions. It establishes various prudential norms, standards, practices and regulations which is required to be strictly abided by its various supervised financial institutions (Kearns, 2009). APRA through its regular monitoring and cross-checks identifies crisis situation and carries out remediation, crisis response and enforcement of the same.

REFERENCES

Brown, C. and Davis, K. (2008). The Sub-Prime Crisis Down Under. Journal of Applied Finance, Spring/Summer, 16-28.

D’Aloisio, T. (2009). Regulatory issues arising from the financial crisis for ASIC and for market participants. Retrieved on Nov 8, 2013 from http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/sdia-speech-chairman-May-09.pdf/$file/sdia-speech-chairman-May-09.pdf

Davis, K. (2009). Infrastructure Trust Financial Management. JASSA: The Finsia Journal of Applied Finance, March 2009, 43-47.

Gruen, D. (2009). Reflections on the Global Financial Crisis. Retrieved on Nov 8, 2013 from http://www.treasury.gov.au/documents/1574/PDF/05_Reflections_on_the_Global_Financial_Crisis.pdf

Kearns, J. (2009). The Australian Money Market in a Global Crisis. Reserve Bank of Australia Bulletin, June, 15-25. Retrieved on Nov 8, 2013 from http://www.rba.gov.au/PublicationsAndResearch/Bulletin/bu_jun09/Pdf/bu-0609-2.pdf

Stevens, G. (2009). Australia and Canada – Comparing Notes on Recent Experience. Reserve Bank of Australia Bulletin, June, 36-44. Retrieved on Nov 8, 2013 from http://www.rba.gov.au/PublicationsAndResearch/Bulletin/bu_jun09/Pdf/bu-0609-4.pdf

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