The Single Supervisory Mechanism - can the European Central Bank break the vicious cycle?

Image sourced from: Wikimedia

Banks and sovereign nations in Europe face a ‘vicious cycle’, where higher borrowing costs and fears a government may default can make it more difficult or expensive for banks to borrow, and vice versa. On 12th September (2013) the European Parliament approved new powers for the European Central Bank (ECB) to act as a central regulator for European banks, in conjunction with national regulators. Is this a meaningful step towards a European banking union? Can it break the ‘vicious cycle’? And what does it mean for Australia?

Islamic finance

In October 2010, the Board of Taxation published a discussion paper on the Review of the Taxation Treatment of Islamic Finance. This discussion paper was in response to the Australian Financial Centre Forum (AFCF) which recommended in its November 2009 report that the impediments to Islamic finance in Australia be considered by the Board of Taxation. The AFCF was established in September 2008 by the then Assistant Treasurer to discuss options for positioning Australia as a leading financial services centre. This post presents some of the key characteristics of Islamic finance and the opportunities for reform in Australia.

Market concentration in the banking sector - household loans

Recently, there has been considerable concern amongst politicians, the media and the broader community regarding competition in the Australian banking sector. Specifically, concerns have been raised regarding banks increasing certain lending rates over and above rises in the RBA’s official cash rate, particularly for housing loans. This observation has led to a debate about collusion and ‘price-signalling’ within the banking sector. This post examines data from the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia (RBA) on market shares and concentration in the household lending sector to see whether there has been any increase in the capabilities of financial institutions to use market power to their advantage.