Financial Services Commission (FSC) Chairman Kim Seok-Dong signed Memorandum Of Understanding (MOU) with APRA‘s Chairman John Laker on August 28th. This MOU allows two countries to agree upon the issue of sharing information and cooperation related to banking and insurance parts of both economies. With this agreement, G20’s two nations are now on the way to make sure the effective supervision and improve financial soundness.
Banking of Australia
This has great deal of meaning because Australia is famous for its banking industry. In 2010, World Economic Forum Financial Development report claimed that Australia is the fifth country that leads financial systems and capital markets. Moreover, Australia’s banking has contributed the Australia’s 11 % output. $135 billion of real gross value added in 2010. Top banks of Asia Pacific area are within Australia and its estimated total asset reaches up to $ 2.7 trillion. Australia’s banking sector can be said to be country’s power source in other parts of the markets: natural resources, infrastructure, public-private partnerships, property and related capital market activities. With this strong banking system, Australian banks attempt to sell their expertise in other parts of banking and financial system as well.
In addition to the solid banking system, the insurance part of the Australia is stable. The general insurance and life insurance’ s prudential aspects are regulated by the Australian Prudential Regulatory Authority (APRA) and as MOU states the cooperation between the APRA, it is likely that FSC and APRA will greater the chance of lucid watch over the banking and insurance business.
Banks of Two Nations
Australia’s banks have made overseas branches in Korea. For instance, Australia New Zealand Bank, one of four main commercial banks of Australia, and Macquarie Group also have their branches in Korea. In Australia, there are Korea Exchange Bank which lacks the full banking system now and Woori Bank which is in the process of making the full banking possible for Korean customers. This MOU will definitely help the countries’ banks more accessible for the customers of each others.
To be specific about this helpful MOU, it discusses that FSC and APRA will have mutual cooperation system to inspect illegal financial activities of the industry. It allows both nations’ laws and policies will be respected as the mutual supervision. Moreover, mutual oversea companies’ information will be shared. The information includes: 1. Licensing procedure; 2. Business status & fiscal health; 3. Inspection process of each supervised commissions. Lastly, both nations will lay foundation on collaboration system and will visit each others’ nations. Though this MOU does not hold legal obligation, it will enlarge the chance of having stable banking systems as well as insurance systems for both.
Currently, FSC expanded the 24 MOUs with 16 G20’s major nations and developing nations and 1 international organization. It is likely that this cooperation will benefit global economies which will be cleaner through cooperation. Thus, the MOU between Australia will help both nations to overcome the economic hardships and bring stability as the cooperation will be strong.
So Yoon. Yu (firstname.lastname@example.org)
 Australia’s Banking Industry (May 2011) published by Australian Government