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Experience Drawn from Australia’s Effort to Ward off Systematic Financial Risks(No.19,2016)


By Zheng Xingchen, Research Team on “The Restructuring of China’s Financial Regulation Framework”, Research Institute of Finance, DRC

Research ReportNo.19, 2016 (Total 4902)2016-03-11

Abstract: To learn about experience from the Australian financial departments on how to ward off systematic financial risks, the Research Institute of Finance of the Development Research Center of the State Council sent a research team to Australia and team members visited the Australian Central Bank, Australian Prudential Regulation Authority, the Securities and Investment Authority and relevant financial departments, and held discussions with their peers over financial systematic regulation issues relating to information exchange, administrative coordination, and risk warning. The Australian main practices are as follows. First, efforts are made to gather and share information on the financial market and various financial institutions are asked to make timely reports to the Australian Prudential Regulation Authority on market transaction data. Based on that and centering on the financial system performance, regulation agencies make regulation communications and coordination between relevant bureaus and offices in order to form policy advice. Second, Endeavors are made to strengthen dynamic analysis of the financial market data, build professional teams for industrial data analysis, examine and remove illegal practices through the big data technology, and conduct systematic pressure tests and pre-warnings against risks. Third, the financial departments take reinforcing protection for financial consumers as the micro basis for avoiding systematic financial risks. If infringement of financial consumers’ interests is involved, whether the products have been approved by regulation authorities or not, these regulation authorities will make timely and proactive interference, stall cheating and misleading acts by financial institutions in question to enable their stable and healthy operation.

Key words: systematic financial risks, enforced information collection, proactive interference