Switzerland. Their aim was to develop uniform international safety standards for banks. The Committee became known as the Basel Committee on Banking Supervision.
The Committee – which has since been expanded – acts as an advisory body and produces Accords (banking regulation recommendations) rather than laws. Even though it has no legislative power, the Committee’s members are senior representatives of bank supervisory authorities from around the world and its views hold great sway. The Basel Accords have become the regulatory standards for virtually all nations with international banking activities.
Among other things, the Accords specify the amount of capital that banks and other financial institutions must hold. The original Basel Capital Accord (now called Basel I) was reached in 1988. This had some shortcomings, so a New Capital Accord (Basel II) was released in 2004. Neither Basel I nor Basel II prevented the Global Financial Crisis. Therefore, a third Accord – Basel III – was endorsed by the G20 Leaders in 2010.
Few see the new set of Basel III regulatory requirements, which will be phased in globally from 2013, as a panacea. Notably, Mervyn King, governor of the Bank of England, believes “Basel III on its own will not prevent another crisis” and that the new levels of capital are insufficient to avoid a further disaster. The harsh reality is that no set of rules can ensure the solvency of the banking system or its resilience in a crisis. Like driving a car, banking involves risks which can’t be totally eliminated.
Banking regulation will continue to evolve, punctuated by bursts of activity every time that there is a serious crisis to manage. In broad strokes, my contention is that the likelihood of future crises can be reduced through better risk management systems and strengthened governance processes – two things which are continually under the spotlight at Gateway.
I’m conscious that the Basel Accords seem obscure and irrelevant to people outside banking. Yet they are the backbone of the financial system and are designed to protect depositors’ and taxpayers’ money. In Australia, we are fortunate that our banks, building societies and credit unions are well-managed and well-regulated. Australian depositors have good reason to be confident in their financial institutions.
Posting Date: 12 September 2011
Explaining political leanings
I understand the difference between up and down. I also know the difference between north and south. But when it comes to left and right in a political sense, I’m less clear. What does it really mean to be left-wing? How does this differ from those who lean to the right?
The terms left-wing and right-wing define opposite ends of the political spectrum. Yet, there is no firm consensus about their meaning. Over time, these labels have become blurred. Former British Prime Minister, Tony Blair, once argued that the distinction between the two had melted away into meaninglessness.
The genesis of the terms “left” and “right” date back to eighteenth century France and the French Revolution. Members of the First General Assembly were seated according to their political orientation. Supporters of the king sat to the right of the Assembly president with supporters of the revolution to his left.
In line with this historic division, contemporary left-wingers are said to be anti-royalists who favour interventionist and regulated market economic policies. Right-wingers, on the other hand, are said to be monarchists who favour laissez-faire, free market economic policies.
In Australia, the Labor Party has traditionally been seen as left-wing (socialist) with historic ties to the union movement. The Liberal Party has customarily been considered as right-wing (capitalist) with long-standing ties to the business community. Many see these labels as outdated in describing Australia’s modern political landscape.
Take, for example, the issue of Australia becoming a republic. Based on traditional ideology, you would expect this cause to be championed by the “anti-royalist” Labor Party. Yet the push for a republic has been spearheaded by a member of the “monarchist” Liberal Party.
Liberal frontbencher, Malcolm Turnbull, is a Liberal blue-blood. (Note: Left-wing parties are typically associated with red, the colour of revolution, while right-wing parties are often associated with conservative blue.) Turnbull is a millionaire former investment banker who, uncharacteristically for a conservative politician, is also a staunch supporter of the Australian Republican Movement.
In trying to discard the monarchy, Turnbull was seen to take a left-wing stance which caused some right-wing hardliners to label him a turncoat. But he is not the only politician to be off course in a strict ideological sense. Former Labor Treasurer, Paul Keating, lurched to the right economically.
Keating’s laudable economic reforms included deregulating the financial system, floating the dollar, reducing import tariffs and introducing compulsory superannuation – things that a Labor Treasurer was not expected to do. It is said tongue-in-cheek that Keating was Australia’s best “Liberal” treasurer and the architect of neo-liberalism in Australia.
Many of Keating’s reforms were based on the 1981 Campbell Inquiry Report into Australia’s financial system. John Howard commissioned the inquiry when he was Liberal Treasurer. But Howard disappointed his traditional supporters – capitalists – by implementing only one of Campbell’s 260 recommendations.
Ironically, it was Keating, post-1983, who introduced many of the Campbell recommendations. He implemented a globalisation agenda which made Australia internationally competitive and opened our economy to the rest of the world. Not surprisingly, big business embraced Keating – even though the Labor Party and corporate Australia are supposed to be adversaries.
So, how left-wing was Keating as a left-wing politician? The reality is that he moved the Labor Party to the right of centre. The message is clear: While academics may argue that ideological differences are reflected in the policies of each party, this is not always the case. Voting purely along traditional party lines is now not a guarantee that you will get policies that are classic left or classic right. I believe that we need to shun this binary thinking since it represents an obsolete linear paradigm. Whether you swing left, lean right or aim dead centre, it’s incumbent on all of us to keep abreast of the workings of our political system.
Posting Date: 16 September 2013
The media politician
In the lead up to the 1960 US presidential election, John F. Kennedy and Richard Nixon squared off in the first televised presidential debate in American history. The viewing public gleaned little about the policies of each candidate but learned a great deal about their looks and presentation. Kennedy came across as calm and confident while Nixon appeared sickly and sweaty.
As the story goes, those who listened to the debate on the radio thought that Nixon had won while those who watched the debate on TV believed Kennedy came out on top. Nixon’s problem was not his debating skills but his staid image compared with the young, charismatic and handsome Kennedy. It is said that Americans were asked to vote “for glamour or ugliness”.
The new medium of television caused citizens to focus on image as well as issues which changed the political landscape forever. The movie-star-looking JFK is credited with sparking the political shift from policy to personality. Many believe this shift has gone too far with contemporary politicians seemingly focussed more on likeability than substance.
There’s
