Public sector must help during crisis: Debelle
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Andrea Cornish
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1/09/2010 5:00:00 AM
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Central banks and governments must continue to be lenders of last resort, according to Reserve Bank of Australia assistant governor Guy Debelle.
Debelle, who leads the RBA’s financial markets division, told delegates at a Risk Australia Conference in Sydney that it would be excessively costly for the financial sector to hold enough capital and liquidity to enable it to survive a freezing of capital markets such as the 2008 crisis.
According to the Sydney Morning Herald, he added that financial services were too critical for the government not to step in, even if such moves were unpopular with taxpayers.
Debelle said rules being discussed in the Basel reforms are aimed at limiting the leverage of financial institutions while providing a robust financial structure and shoring up capital buffers.
According to Debelle, there is a risk that the world could fall into a double dip recession, but the risk is hard to quantify.
“I think it’s a risk, but it’s a somewhat unquantifiable risk,” he said.
Australia remains one of the most economically secure nations on the planet. It is experiencing its lowest deficit in nine years, strong economic growth and increasingly lower unemployment.
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