1 00:00:00,080 --> 00:00:02,880 Speaker 1: Afternoon, the Reserve Bank is proposing to change the rules 2 00:00:02,880 --> 00:00:05,040 Speaker 1: around how much money our banks are supposed to hold 3 00:00:05,080 --> 00:00:07,440 Speaker 1: for a rainy day. So they're reviewing the so called 4 00:00:07,680 --> 00:00:10,560 Speaker 1: capital requirement rules, which are supposed to help retail banks 5 00:00:10,560 --> 00:00:13,160 Speaker 1: whether are one in two hundred year crisis, but they're 6 00:00:13,160 --> 00:00:16,120 Speaker 1: widely considered to be onerous and very conservative. Doctor Claire 7 00:00:16,160 --> 00:00:20,360 Speaker 1: Matthews is Massi University's banking expert. High Clear, Hi, Heather, 8 00:00:20,480 --> 00:00:22,000 Speaker 1: how do you feel about them going softer? 9 00:00:25,160 --> 00:00:28,120 Speaker 2: Reason to be comfortable. The reality is there's been a 10 00:00:28,200 --> 00:00:32,120 Speaker 2: lot of comment about the fact that the current regulations 11 00:00:32,159 --> 00:00:34,319 Speaker 2: were seen as a little bit higher than they need 12 00:00:34,360 --> 00:00:37,239 Speaker 2: to be. So all we're looking at is bringing them 13 00:00:37,280 --> 00:00:40,000 Speaker 2: back to what is really seen as a more reasonable level. 14 00:00:40,400 --> 00:00:42,400 Speaker 1: And which of the two options do you prefer. 15 00:00:44,400 --> 00:00:47,320 Speaker 2: At the stage? I don't have a strong preference. I 16 00:00:47,320 --> 00:00:49,360 Speaker 2: think we need to have a little bit more time 17 00:00:49,360 --> 00:00:52,120 Speaker 2: to have a look at them and just see exactly 18 00:00:52,120 --> 00:00:53,680 Speaker 2: what are the implications of them both. 19 00:00:53,840 --> 00:00:55,840 Speaker 1: How would you feel abo us about us unwinding it 20 00:00:55,880 --> 00:00:57,440 Speaker 1: all together, going back to the way it was pre 21 00:00:57,520 --> 00:00:58,240 Speaker 1: twenty nineteen. 22 00:01:00,040 --> 00:01:02,640 Speaker 2: Well, that's an option, but I think the reality is 23 00:01:02,680 --> 00:01:05,640 Speaker 2: that it's reasonable to suggest that before twenty nineteen we 24 00:01:05,640 --> 00:01:08,240 Speaker 2: were perhaps a little bit light so beefing it up 25 00:01:08,280 --> 00:01:11,360 Speaker 2: a little bit, but perhaps just not as far as 26 00:01:11,440 --> 00:01:13,399 Speaker 2: the current rules have taken us. 27 00:01:13,680 --> 00:01:16,280 Speaker 1: I mean, there are some estimations that if we had 28 00:01:16,280 --> 00:01:18,280 Speaker 1: gone all the way through with this, we would be 29 00:01:18,319 --> 00:01:21,480 Speaker 1: paying twenty five basis points maybe thirty eight bases points 30 00:01:21,760 --> 00:01:24,319 Speaker 1: too much in contrast to the Australians. Would you say 31 00:01:24,360 --> 00:01:25,000 Speaker 1: that's about right. 32 00:01:26,880 --> 00:01:29,720 Speaker 2: I haven't done the calculations, but I'm prepared to accept 33 00:01:29,720 --> 00:01:31,800 Speaker 2: that those calculations are probably accurate, and. 34 00:01:31,760 --> 00:01:33,800 Speaker 1: So therefore if we stop it in its tracks, won't 35 00:01:33,800 --> 00:01:35,440 Speaker 1: be as much as that, but we could potentially save 36 00:01:35,480 --> 00:01:38,400 Speaker 1: a fair chunk in money that we're not going to 37 00:01:38,400 --> 00:01:40,160 Speaker 1: have to pay. Oh. 38 00:01:40,200 --> 00:01:43,080 Speaker 2: Absolutely. It will have an impact on the rates that 39 00:01:43,280 --> 00:01:46,640 Speaker 2: are charged on home loans and other lending and therefore 40 00:01:46,680 --> 00:01:49,640 Speaker 2: all judiciary payments, and that's got to be good for everybody. 41 00:01:49,760 --> 00:01:52,640 Speaker 1: Yeah, listen on that. Do you have any concern about 42 00:01:52,640 --> 00:01:55,080 Speaker 1: the fact that this review has quite clearly come about 43 00:01:55,080 --> 00:01:57,160 Speaker 1: because the Finance Minister has been asking for it. 44 00:02:00,720 --> 00:02:05,360 Speaker 2: I mean, that is a concern, the political intervention. But 45 00:02:05,960 --> 00:02:09,920 Speaker 2: given that it's reasonable that you know, there have been 46 00:02:09,960 --> 00:02:12,000 Speaker 2: a lot of people that have said that actually the 47 00:02:12,080 --> 00:02:15,280 Speaker 2: bank Reserve Bank went too far. It's just taken the 48 00:02:15,400 --> 00:02:17,960 Speaker 2: government intervention to actually force them to have another look 49 00:02:18,000 --> 00:02:22,280 Speaker 2: at it. So yes, some disquiet, but not a huge amount. 50 00:02:22,440 --> 00:02:25,560 Speaker 1: And then what about Christopher Luxen this morning saying that 51 00:02:25,639 --> 00:02:28,040 Speaker 1: he thought the Reserve Bank should have cut the ocr 52 00:02:28,120 --> 00:02:31,480 Speaker 1: lower earlier. Is that also a little bit of overstepping 53 00:02:31,480 --> 00:02:32,600 Speaker 1: the mark rey the independence? 54 00:02:32,639 --> 00:02:36,359 Speaker 2: What do you think, Oh, it's fine to offer an opinion, 55 00:02:36,400 --> 00:02:38,800 Speaker 2: but the problem is when you're the prime minister, it's 56 00:02:38,880 --> 00:02:42,280 Speaker 2: more than an opinion. It's seeking to sway what's happening. 57 00:02:42,600 --> 00:02:45,480 Speaker 2: And yes, that really is going beyond what should be 58 00:02:45,480 --> 00:02:48,160 Speaker 2: being said, given that we do have an independent Reserve 59 00:02:48,200 --> 00:02:50,639 Speaker 2: Bank and they're making the judgment call. 60 00:02:50,720 --> 00:02:52,840 Speaker 1: Okay, but the thing is clear, we all know the 61 00:02:52,880 --> 00:02:54,800 Speaker 1: Reserve Bank is wrong, right, we're looking at it. We 62 00:02:54,800 --> 00:02:56,760 Speaker 1: can all see they should have cut earlier. We all 63 00:02:56,800 --> 00:02:59,480 Speaker 1: knew the capital requirements were too onerous. So if you 64 00:02:59,520 --> 00:03:01,480 Speaker 1: have to choose between, they'm actually getting on the right 65 00:03:01,520 --> 00:03:04,120 Speaker 1: track with a little bit of political help versus independence, 66 00:03:04,200 --> 00:03:05,440 Speaker 1: which is more important to you. 67 00:03:07,360 --> 00:03:10,160 Speaker 2: To be honest, Actually the independence is more important because 68 00:03:10,720 --> 00:03:14,240 Speaker 2: the political interference at the moment might not be too bad, 69 00:03:14,600 --> 00:03:17,320 Speaker 2: but there's a strong risk that you know, it's a 70 00:03:17,520 --> 00:03:19,520 Speaker 2: slippery slope, and you know a little bit now and 71 00:03:19,560 --> 00:03:23,160 Speaker 2: it gets a lot more significant later on. So independence 72 00:03:23,200 --> 00:03:26,480 Speaker 2: would win now over the benefits of the little bit 73 00:03:26,520 --> 00:03:28,119 Speaker 2: of political push that we've had so far. 74 00:03:28,280 --> 00:03:31,000 Speaker 1: Claire, thanks for your time and your expertise. That's Claire Matthews, 75 00:03:31,000 --> 00:03:34,639 Speaker 1: Doctor Clare Matthews, Matthew, University banking expert. For more from 76 00:03:34,720 --> 00:03:37,960 Speaker 1: Heather Duplessy Allen Drive, listen live to news talks that'd 77 00:03:38,000 --> 00:03:42,080 Speaker 1: be from four pm weekdays, or follow the podcast on iHeartRadio.