• The country’s Financial System
Historical Overview
Commonwealth Bank of Australia establish by legislation in 1911 change at one point to what people know now as the Reserve Bank of Australia (RBA) in 1959. This original body corporation was specially built to manage all central bank functions. While the bank was acquiring its new name also commercial and saving bank’s functions were passed to the new institution called Reserve Bank of Australia.
Once the Federation of Australian States got into the Commonwealth, the Parliament took the power to start making the laws about the currency and banking system of the country. Commonwealth Bank Act was enacted in 1911 where gives the bank the functions of the commercial and savings banking,
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Those monetary laws help to set the interest rates of overnight loans in the market, the influence of cash rate in others interest rates of the economy that push the behavior of people who borrow or lend.
Is a requirement that banks maintains price stability, full employment, and economic wealth to all the people living in Australia. The achievement of these laws might be sometimes subjective because of the market’s volatility, but the bank tries to seek for their inflation target to keep consumers price with a two to three percent of inflation. Allocating the inflation conserves the value of the money and for a long run creates an expansion over the economy.
For further prepositions from the Corporation Act the regulations of financial institutions servers throughout a licensing and disclosure regime. Anyone who carries a financial service business in the country must hold an Australia financial service license (AFSL) issued by the Australian Security and Investment Commission
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Types of Financial Institutions operating in the country
In Australia is found many financial institutions that contribute to the economy for a good cause.
• First, banks that provide financial service including every sector of the market. Foreign banks to operate in Australia they required to restrain the deposit taking service to all wholesale markets.
• Building societies: which raise funds by the acceptance of household deposits, loan money, and payments services.
• Credit unions: provide deposits, personal loan and the payment services to the customer.
• Money market corporations: primarily in wholesale market, they borrow and lend from big corporations and government agencies.
• Finance Companies: provide loans to domestic and small-medium business.
• Securities: special vehicles issuing securities by mortgage of housing loan backed by a pool of asset.
• Life insurance companies: where the asset is managed in a statutory fund and mostly invested in equities and debt
On the 1st of January was the official date when the existence of the Commonwealth of Australia occurred when the six colonies no longer were independent but states and united as one country.
Gaining financial dominance also meant that the Commonwealth had de facto control over residual areas, as it could determine how much money was to be spent on education etc.
Commonwealth Bank brand is the most recognised brand in Australian financial services industry. It is a brand that has evolved over its 102 years of operation with a strong brand history. Commonwealth Bank brand is highly regarded and trusted within the Australian financial services industry. Other well known brands under the Commonwealth Bank Group includes Colonial First State, CommInsure, ASB (New Zealand), Sovereign, FirstChoice, CommSec, and Bankwest.
The banking industry has over the years evolved from simple to large and complex organization. They have grown from one street building into having multiple branches some of which are international. Their clients range from individual and institutions to governments and other banks. Banks do not manufacture physical things. Their work is simply services for money (Koch & MacDonald 2010). Such services include storing, lending and managing money. All people and institutions, as well as governments, need money to operate accordingly.
Booms, busts, recessions, and growth; all of the preceding terms are characteristics of a typical market economy. There are times when an economy can flourish spectacularly and there are times when it can fail miserably. Consequently, it is the responsibility of a nation’s central bank to manage these fluctuations through conducting effective monetary policy. The following paper will assume the perspective of the Reserve Bank of Australia (RBA) and critically analyze the past, present, and future of the Australian economy while considering specific sectors.
The Commonwealth Bank was created in 1911 under the Commonwealth Bank Act. It was empowered to conduct both savings and general banking business supported by a Federal government guarantee. The Commonwealth Bank became the first bank involved in both trading and savings bank activities (Peat Marwick 1985:2). The Commonwealth Bank did not specifically have a central banking remit and it was not responsible for note issue, instead it was established as a vehicle to provide competition for commercial banks and to keep accounts of the Commonwealth government.
The Commonwealth Bank was discovered under the Commonwealth Bank Act in 1911 and started activities in 1912. Currently the firm has over 800,000 investors and 52,000 humans who are functioning under the company (Commonwealth Bank 2015). It has become the biggest bank of Australia provides product and services involving credit cards, Loans, saving accounts and transactions. The
Monetary policy, ‘The government’s policy relating to the money supply, bank interest rates, and borrowing’ (Collin: 130), is another tool available to the government to control inflation. Figure 4 shows, that by increasing the interest rate (r), from r1 to r2, the supply of money (ms) is reduced from Q1
Strategic information system is the information system, which are developed for the business initiative of any organization (Cassidy 2016). The strategic information management or SIM is the most important feature in the field of information technology. This strategic information management helps the organizations or companies in storing, categorizing, processing and transferring the information or data that are received or created (Cresswell and Sheikh 2013). Moreover, it offers several techniques for applying analytical tools to the information repositories, which allow them in recognition of the opportunities for growth and improvement of the efficiency in operations.
The Commonwealth Bank of Australia (CBA) supports sector with their following industries such as banking, financial and investment service. Founded in1911 as a government bank, received the first guarantees of the federal government. The first bank branch was opened in Meloburne-July 1912. In 1913 there were already
Australia has a strong, profitable, sophisticated and well regulated banking sector which is welcoming of new entrants and increasingly engaged in regional and global markets.
A well-functioning financial sector should perform smoothly in these aspects. First, the financial sector provides a safe and efficient payment system, which is essential to support the day-to-day business of the UK economy. Millard and Willison (2006) suggest that an efficient and stable national payment system decreases the cost of exchanging goods and services, and is essential to the functioning of interbank, capital and financial markets. Second, financial institutions perform the financial intermediation role of transferring funds from surplus units to deficit units (Waitzer & Sarro, 2014).
Retail banking can be defined as an industry where financial institutions offer mass market banking in which individual customers use local branches of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards.
New Zealand’s banking system has its roots in continental Europe. The first trading bank (the union bank of Australia) was established in 1840. After 1860, a numbers of other Australian and British banks followed, three were British overseas banks, two were Australian and one was local. Therefore the New Zealand banking sector has a long history of foreign ownership
'Consortium Bank '- “A subsidiary bank created by numerous banks. A consortium bank is created to fund a specific project (such as providing affordable homeownership for low- and moderate-income home buyers) or to execute a specific deal (such as selling loans in the loan syndication market)”. (Investopedia, 2009)