Question

In designing regulatory​ frameworks, the costs of regulations​ are:

A. costs of regulators. B. the costs created by​ customers' reactions to changes in relative prices. C. compliance costs. D. all of the above.

Which of the following institutions is NOT responsible for the prudential regulation of​ banks' and​ depositors' protection?

A.RBA. B.ACCC. C.APRA. D.ASIC.

Answer 1

1) In designing regulatory​ frameworks, the costs of regulations​ are:

A. costs of regulators. B. the costs created by​ customers' reactions to changes in relative prices. C. compliance costs. D. all of the above.

The Answer is D. all of the above.

There is no standard definition for Regulatory costs. However,  it can be said to include "all the costs incurred directly or indirectly by society in preparing and implementing regulations". Soceity includes both Government (& regulators) and Citizens.

Based on the above, the costs of regulators, costs created by customer's reactions to changes in relative prices and compliance costs will be covered as a part of costs of regulations. Hence, the answer is D.

2) Which of the following institutions is NOT responsible for the prudential regulation of​ banks' and​ depositors' protection?

A.RBA. B.ACCC. C.APRA. D.ASIC.

The Answer is A. RBA

RBA (Reserve Bank of Australia) - RBA's duty is to contribute to the stability of the Australian currency, full employment to Australian people, and the economic prosperity and welfare of the Australian people. It achieves these by regulating monetary policy, working to maintain a strong financial system and efficient payments system, and issuing the nation's banknotes. It is not responsibile for regulation of other banks in Australia and depositors' protection.

ACCC (Australian Competition and Consumer Commission) - ACCC is an independent statutory authority whose prime role is to enforce the Competition and Consumer Act 2010. The ACCC promotes competition and fair trade in markets to benefit consumers, businesses, and the community.. These businesses includes banking sectors as well. Hence, ACCC plays a role in prudential regulation of banks and depositors' protection.

APRA (Australian Prudential Regulation Authority) - APRA is an independent statutory authority which supervises institutions across banking, insurance and superannuation, and is accountable to the Australian Parliament. Hence, APRA is responsible for the prudential regulation of​ banks' and​ depositors' protection.

ASIC (Australian Securities and Investments Commission) - ASIC is an independent body setup under Australian Securities and Investments Commission Act, 2001. ASIC's major role is to -

• maintain, facilitate and improve the performance of the financial system and entities in it.
• promote confident and informed participation by investors and consumers in the financial system.

Hence, ASIC also plays a role in prudential regulation of banks and depositors' protection.