Weekly Update: 9.12.22

“Most central banks have indicated that the use of CBDC as a monetary policy tool is not the focus of their research. The emphasis instead is on a ‘digital banknote’ that would complement physical cash, not replace it.” 

– RBA Assistant Governor Brad Jones (Financial System), 17th Central Bank Conference on the Microstructure of Financial Markets, Sydney, 8 December.

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Parliamentary Update:

• Treasurer Jim Chalmers held a press conference following the RBA’s December rates decision, and made comments on ABC Radio in response to questions about the potential reappointment of RBA Governor Philip Lowe in mid-2023.
• The Treasurer also issued a media release and held a press conference on the September quarter National Accounts.
• Small Business Minister Julie Collins held a roundtable of counterpart Ministers from states and territories, followed by a doorstop interview. She announced that Dr Craig Emerson would oversee a review of payment times for small businesses.
• Assistant Treasurer Stephen Jones travelled to Indonesia to hold talks with Indonesian Ministerial counterparts.
• The Federal Government called for pre-Budget submissions before Friday 27 January 2023.

Policy Update:

• The ABA attended a meeting with Council of Small Business of Australia (COSBOA) members as well as the Fair Work Commission, Australian Small Business and Family Enterprise Ombudsman (ASBFEO), the ACCC, the Victorian Small Business Commission, the Office of the QLD Small Business Commissioner, and Treasury, to discuss issues affecting small businesses in Australia.
• The ABA joined banks, consumer representatives and local stakeholders on Yawuru country this week as part of the Broome Circle banking forum. The forum, led by Broome Circle’s Veronica Johnson, develops local solutions to the banking accessibility issues that face the remote First Nations communities in the Kimberley.
• The ABA also visited the community of Djarindjin in the Dampier Peninsula and met with Nathan McIvor, CEO of Djarindjin Aboriginal Corporation, and members of the community, to hear about their banking experiences.

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Regulatory Update:

• RBA Associate Governor (Financial System) Brad Jones gave a speech at the 17^th Central Bank Conference on how the case for a central bank digital currency (CBDC) in Australia fits into the wider international debate over the future of money, and what problems an Australian CBDC would solve, including adding more competition and efficiency to merchant and cross-border payments.
• The RBA released responses to queries from the RBA review panel. The questions were on monetary policy arrangements, implementation, communication, governance and institution.
• ASIC Chair Joe Longo gave a statement to the Joint Committee on Corporations and Financial Services, outlining the regulator’s strategic and enforcement priorities, including breaches of best interest obligations, design and distribution of financial products, and inappropriate charging of fees.
• The RBA released their December quarter bulletin. Topics included economic literacy, stablecoins, RBA and AOFM lending facilities and new measures of financial distress which include monitoring Google and Twitter.

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Economic Update:

• APRA released new data on housing loan performance, showing a continued decline in new and outstanding non-performing loans in the September quarter.
• The RBA raised the cash rate target by 25 bps to 3.10%.  “The Bank’s central forecast is for CPI inflation to decline over the next couple of years to be a little above 3 per cent over 2024.”
• Australia recorded a $2.3 billion current account deficit in the September quarter, following 13 consecutive quarters of current account surplus. The balance on goods and services decreased by $11.1 billion but remained in a surplus of $31.2b, while the net primary income deficit widened by $6.4 billion to $33.2 billion in the September quarter.
• Household spending continues to rise. The ABS reports:
  • Household spending increased 20.7% through the year on a current price, calendar-adjusted basis.
  • Through the year, household spending increased for both services (+34.2%) and goods (+9.3%).
  • Through the year, both non-discretionary (+21.0%) and discretionary (+20.4%) spending increased.

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Communications Update:

• The ABA and member banks’ visit to remote communities in Western Australia was covered on ABC radio.
• Earlier this week the ABA published its response to the Callaghan Banking Code Review. Overall, the ABA supports in full, part or principle approximately 72% of the 116 recommendations from the review.

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