The Business Council of Australia has lodged a submission in response to the Interim Report of the Financial System Inquiry.

The Financial System Inquiry should frame its final recommendations around the system’s ability to efficiently fund Australia’s future economic growth.

First, we recommend that the final report should make a clear assessment of the ability of the financial system to become more globally competitive and to efficiently fund future growth in the Australian economy, and use this assessment to first identify and then test its policy recommendations.

Second, we recommend that, given the interim report’s generally positive findings about the competitiveness and stability of Australia’s financial system, and its integration with global regulatory frameworks, the FSI should not recommend further regulation of the banking system that could harm prospects for funding Australia’s future economic growth.

Third, we recommend key areas to focus on in the final report include:

• regulatory settings that can accommodate the rapid pace of technological change
• the need to diversify funding sources to reflect changed approaches to savings and to avoid problems experienced in the global financial crisis
• funding innovation and risk taking by Australian businesses, which is critical for productivity growth and higher living standards
• regulator performance.

Submission to the Interim Report of the Financial System Inquiry