Just because the GFC happened doesn't mean it was caused by a lack of regulation, said a senior APRA executive in a major speech this week.
"Just because one event follows another does not mean that the first event caused the second event," explained David Lewis, APRA general manager at the UBS Australian Financial Services Conference yesterday.
"Understandably, when there has been a breakdown in financial markets of the magnitude of the one we are currently dealing with, there will be calls for more financial sector regulation," said Lewis.
"We should make sure that the changes we make are well thought through and not based purely on circumstantial evidence," he said.
Lewis said Australia has been shielded from the worst of the crisis because of "maintenance of sound fiscal and monetary policy settings by successive Governments ... a financial market that is dominated by large and, generally, soundly-run financial institutions not prone to excessive risk-taking; and active and conservative prudential supervision."
Lewis said that while regulation and active supervision is crucial, so too is "the adoption of sound risk management practices and good corporate governance within financial institutions."
"Unfortunately, the quality of the implementation of prudential policies is often overlooked (or simply taken for granted)," he said.
Lewis said continuing to focus on 'nuts and bolts' practical issues is a key to how successful Australian financial regulation has been and how it should work in the future.
"We realise that APRA's conservatism can - at times - be an irritant to business aspirations. And that some of the decisions we take can be 'line-ball'. But, ultimately, erring on the side of caution serves not only to protect beneficiaries, but also to provide an important source of confidence in our financial institutions."
James provides a local perspective and explains to the audience why the mining investment boom is an aberration and it is now a 'return to the old normal'. To view James Bond's slides please click ... Watch video
First, a confession. Mark may have started his career as an economist but he joins this year's panel not as a chief economist but as the head AXA Framlington Asia. This is to the benefit of the audience ... Watch video
The anchor man of the panel, Saul provides great insights on the domestic economy. And bravely makes the forecast that the Reserve Bank will not cut interest rates this year and that the next move is up ... Watch video
Bob believes plunging oil prices may extend the stockmarket rally by a year or two and discusses why investors could expect a volatile few months. Overall, he believes we are entering an era of low returns ... Watch video
Is the European economy dead in the water? Is faith on Abenomics waning? Why should investors be more optimistic about the US economy this year? Chris Probyn, the Boston-based chief economist of State ... Watch video
Get it Daily
FREE to your inbox, get the Financial Standard Daily Email.