JOINT MEDIA RELEASE Date: 12 October 1998 Embargo: For Immediate Release

MEMORANDUM OF UNDERSTANDING

THE RESERVE BANK OF AUSTRALIA AND
THE AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

The Reserve Bank and the Australian Prudential Regulation Authority (APRA) today released a Memorandum of Understanding covering their respective responsibilities for promoting the stability of the Australian financial system.

Under Australia's new financial regulatory framework, the Reserve Bank retains responsibility for monetary policy and the maintenance of overall financial system stability, including stability of the payments system. APRA is responsible for the prudential supervision of banks, life and general insurance companies and superannuation funds. If the State and Territory Governments agree, APRA will also be responsible for the prudential supervision of building societies, credit unions and friendly societies.

The Memorandum of Understanding sets out a framework for co-operation between the Reserve Bank and APRA, and covers such matters as information sharing and consultation arrangements for the handling of threats to system stability.

The Memorandum is attached. Copies are also available on the web sites of the Reserve Bank and APRA.