Currency Reform

Gillard wins exemption for Australian banks from new G20 rules

(Xinhua)
Updated: 2010-11-13 10:54
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CANBERRA -- Australian Prime Minister Julia Gillard has won significant concessions for Australian banks at the G20 summit in South Korea, Australia's media reported on Saturday.

Global leaders at the G20 summit on Friday reaffirmed their commitment to the International Monetary Fund's financial reforms, which include new rules on the minimum levels of capital and liquid assets global banks must hold to meet any run on funds.

The G20 leaders also agreed to revive stalled world trade talks and to limited co-operation on currency valuations.

Under the banking reform, Gillard and Treasurer Wayne Swan successfully argued against uniform rules and secured special treatment for Australian bank.

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She told The Australian newspaper that the new Basel III guidelines would be implemented around the world, but the requirement to hold higher levels of government bonds was not going to apply to Australian banks.

Gillard's move came as all four major banks enraged the government by pushing their mortgage rates beyond the Reserve Bank of Australia's (RBA's) official movement.

The National Australia Bank (NAB) and Westpac on Friday became the last of the four majors to raise their mortgage rates above the 25-basis-point increase in official rates.

NAB on Friday raised its standard mortgages by 43 basis points to 7.67 percent, while Westpac moved by 35 basis points to 7.86 percent.

Last week, the Commonwealth Bank of Australia lifted its rates by 45 basis points to 7.81 percent, with the Australia and New Zealand Banking Group following on Wednesday with a 39-basis-point increase to 7.8 percent.

The banks have blamed higher costs of securing funds on international markets on their move to lift rates higher than official rate.

Gillard said she was "very, very critical" of their move.

"The decisions at the G20 summit provided no excuse at all for Australian banks to raise their rates above and beyond the official level of the Reserve Bank," Gillard told The Australian newspaper on Saturday.