The Bulletin publication schedule is changing

From 2024, the Bulletin will be published in the months of January, April, July and October. To make this transition, the December 2023 issue will become the January 2024 issue, published on Thursday 25 January.

See the 2024 calendar for more dates.

March 2015

Australian Banknotes: Assisting People with Vision Impairment

Kylie Springer, Priya Subramanian and Terence Turton

A key function of the Reserve Bank is to design and produce banknotes that meet the needs of all sections of the community. The Bank has consulted a wide range of subject matter experts and stakeholders to ensure that the next generation of Australia's banknotes reflects Australia's cultural identity, is secure and remains functional. One aspect of functionality is that the banknotes are accessible to people with vision impairment. This article outlines the work the Bank has undertaken to meet the needs of the vision-impaired community, from the paper decimal banknote series that was issued in 1966 through to the forthcoming next generation series of banknotes.

banknotes, currency, money, payments

The Economic Performance of the States

Australian Economy
Sam Nicholls and Tom Rosewall

Over the past decade, the mining investment boom in resource-rich states accounted for much of the difference in the pace of economic growth across states. More recently, there has been a gradual rebalancing of growth, though the transition has been uneven. Housing market activity has picked up and this has been accompanied by stronger consumption growth, particularly in New South Wales and Victoria. State labour market conditions have generally softened and the unemployment rate is elevated in all states.

households, investment, mining

Insights from the Australian Tourism Industry

Australian Economy
Corrine Dobson and Karen Hooper

Conditions in the tourism industry mirror many of the broader economic trends observed in the rest of the economy because tourism expenditure is discretionary and, like all trade-oriented industries, the tourism industry is exposed to developments in overseas markets and movements in the exchange rate. Over recent years, the Australian tourism industry has experienced challenging conditions. However, the fundamental conditions facing the industry have become more favourable, supported by improved economic conditions in key North Atlantic markets and the depreciation of the Australian dollar, as well as continued strong growth in tourism exports to China. This article examines recent developments in Australia's tourism industry and how these relate to broader economic conditions.

china, export, global economy, international

Australia and the Global LNG Market

Global Economy
Natasha Cassidy and Mitch Kosev

Australian exports of liquefied natural gas (LNG) will rise significantly over the next few years as a number of large-scale investment projects reach completion. The bulk of these exports will be to Asian customers under long-term contracts, with their price linked to the price of oil. The Asia-Pacific LNG market over the next decade will be influenced by potential changes to the composition of Asian energy demand, the magnitude of the increase of US LNG exports to Asia and any changes to the traditional oil-based pricing mechanism. The ramp-up in LNG production will boost Australian output and incomes over the next few years; however, the effect on Australia's living standards will be lessened to some extent by the high level of foreign ownership and the relatively low labour intensity of LNG production.

export, international, investment, resources sector

China's Property Sector

Global Economy
Alexander Cooper and Arianna Cowling

Property development, especially of residential property, represents a sizeable share of China's economic activity and has made a considerable contribution to overall growth over recent history. Residential property cycles in China have been larger than cycles in commercial real estate, and may pose risks to activity and financial stability. The current weakness in the property market differs somewhat from previous downturns as there are indications that developers may be much more highly geared than in the past, contributing to financial stability risks. Although urbanisation in China may provide support for property construction in coming years, weakness in the residential property market is likely to persist. Policymakers have taken actions to support activity and confidence in the market, and have scope to respond with further support if needed. However, broader concerns about achieving sustainable growth may limit the scale of any stimulus they are willing to provide to the sector.

china, housing, international

Developments in Banks' Funding Costs and Lending Rates

Eduardo Tellez

This article updates previous Reserve Bank research on how developments in the composition and pricing of banks' funding have affected their overall cost of funding and the setting of lending rates. The main finding is that the spread between the major banks' outstanding funding costs and the cash rate narrowed a little over 2014. This was due to slightly lower costs of deposits combined with a more favourable mix of deposit funding. The contribution of wholesale funding to the narrowing was marginal as more favourable conditions in long-term debt markets were mostly offset by a rise in the cost of short-term debt. Lending rates declined a little more than funding costs, reflecting competitive pressures.

banking, fees, finance

Market Making in Bond Markets

Jon Cheshire

In November 2014, the Committee on the Global Financial System (CGFS) published a report on developments in market making and proprietary trading in fixed income and related derivative markets (CGFS 2014). The aim of the report was to facilitate a better understanding of how ongoing changes in these activities may affect liquidity in markets and to assess whether these changes are driven by market or regulatory forces. The report found that there have been changes in liquidity conditions across markets, including in Australia, with market activity becoming more concentrated in the most liquid instruments and declining in less liquid ones. These changes in market-making activity have been driven by both market-based developments and regulatory change. To the extent that liquidity risks were underpriced in the period prior to the global financial crisis, many of the subsequent changes in market structure and the increase in liquidity premiums are welcome. However, with the changes still ongoing, bond issuers and investors will be likely to have to make further adjustments to the way in which they operate in fixed income markets and manage liquidity risks.

bonds, financial markets, liquidity

Shadow Banking – International and Domestic Developments

Financial Stability
Josef Manalo, Kate McLoughlin and Carl Schwartz

One of the lessons from the global financial crisis is that systemic risk to the financial system can arise from outside the regular banking system, in so-called ‘shadow banking’. This article reviews post-crisis international and domestic trends in shadow banking, and regulatory efforts to better understand and address potential risks that may arise. In Australia, systemic risks arising from shadow banking appear limited given its relatively small size and minimal links to the banking system, but it remains an area for regulators to monitor and better understand.

banking, financial stability, global financial crisis, risk and uncertainty

The IMF's ‘Surveillance’: How Has It Changed since the Global Financial Crisis?

Global Economy
Emily Poole

The International Monetary Fund (IMF) is mandated by its members to oversee the international monetary system. One of the key ways it does this is through bilateral and multilateral ‘surveillance’ – monitoring, analysing and providing advice on the economic and financial policies of its 188 members and the linkages between them. This article discusses three broad issues identified with the IMF's pre-2008 surveillance by the IMF and IMF watchers – analytical weaknesses (though these were not confined to the IMF alone), ineffective communication of key surveillance messages in public reports, and governance issues and practical constraints – and examines the steps taken by the IMF to address them. Significant improvements have been made in addressing analytical weaknesses, and efforts to improve the effectiveness of the IMF's communication are ongoing. However, issues around governance remain unresolved, which risks reducing the credibility and influence of IMF surveillance.

global financial crisis, international

The graphs in the Bulletin were generated using Mathematica.

ISSN 0725–0320 (Print)
ISSN 1837-7211 (Online)