ABSTRACT
This chapter looks at the growth of regulation and the forces for deregulation in the late 1970s and 1980s and contrasts the developments with deregulation in the second half of the nineteenth century. It explains the consequences in terms of the banks’ performance post-deregulation and demonstrates the strong parallels between the two eras. The report of a Royal Commission, published in 1937, concluded that greater economic stability and improved efficiency could be achieved by strengthening the Commonwealth Bank as a central bank. The Commission was also concerned with the industrial structure and performance of the trading banks. In acts of incorporation, Australian colonial banks sought more elastic issues and the limits were raised to paid-up capital plus coin and bullion. Bank interest margins had been higher in Australia than in comparable countries. The floating of the exchange rate and the anticipated growth of the banking sector was expected to give the authorities independent control of monetary aggregates.
