A series of reports from journalists with Swan and Prime Minister Julia Gillard at the G20 meeting, in Seoul, culminated in a front-page lead story in The Australian headlined: “PM helps big banks beat new G20 rules”.
The report said Gillard had “won significant concessions for Australian banks at the G20 summit ... exemptions for Australian banks from the new ‘Basel III’ liquidity guidelines.”
The truth is slightly different. As reported previously in Banking Day, the proposed Basel III minimum liquidity standards would require banks to hold substantial government debt. That’s a problem for countries like Australia, Singapore, Hong Kong and Saudi Arabia, where government debt is low (see our Basel III backgrounder).
The problem is one of several which the Basel Committee several months ago agreed needs special treatment. A sub-committee is now studying how the rules will apply to Australia and other countries in the same situation. On information supplied to Banking Day, it is unlikely that Swan or Gillard would have needed to do any work at the G20 meeting to save Australian banks from having the minimum liquidity standards applied to them without adjustment.