ABSTRACT
Crises provide opportunities to learn and change where necessary. Australia was not purely lucky when it emerged relatively unscathed from the financial crisis of 2007-9: it entered the crisis fairly well prepared with a robust regulatory architecture and strong prudential regulatory regime, and it combined past experience, good management skills and opportunity to withstand the challenges. Despite its common-law jurisdiction, Australia’s experience of the financial crisis differed from those of the US and the UK. Australia is an economy primarily driven by commodities and natural resources. The strong demand from China for Australia’s resources protected the Australian financial sector to a certain extent. Further, the Australian twin-peaks regulatory framework worked well. Australian banks have withstood the financial crisis better than UK banks. Australia did not have any bank runs. Four of the nine AA-rated banks around the world are Australian banks. Australia has also performed well in the Financial Development Index of the World Economic Forum 2012 (World Economic Forum 2012). They are ranked fifth out of 60 countries in the overall index and ninth in banking-system stability.
