Introduction
With economic and financial ties increased among Australia and other countries, the degree of globalization of Australian financial system continues to deepen. There are many factors influenced the globalization of the Australian financial system. Three main factors including the development of Australia's real economy, financial innovation and financial liberalization are promoted in this essay.
The development of Australia's real economy
Australian economic has a continued and rapid growth in recent years. Since 1997, the average GDP growth rate is 3.6%. Through the tireless efforts of the Government and the people, the Australian economy continued to improve in the past decade. To mid-2008, the unemployment rate fell to its lowest level for two decades. The Gross domestic product (GDP) of Australia was at the position of 13th in worldwide in 2010. Its per capita GDP reached $ 54,869, ranking sixth in the world. At present, Australia is recognized as on of the world's most health economically developed countries. In March 2011, the Australian unemployment rate was 4.9%, far lower than the U.S., Britain, Canada and other developed countries. Australia's long term exports of agricultural and mineral resources take a substantial income. Australia's high-tech industry has rapidly developed in recent years so competition increased in the international market. Many companies went out to begin global investment and production. Australia expanded trade with other countries. The economic development of the Australian requires international and globalization of financial system in order to ensure smooth cross-border economic activities. Trade globalization objectively requires large-scale capital flows in the international order to facilitate international trade settlement; at the same time, the globalization of trade also requires financial institutions and financial services to develop cross-border. Therefore, Australian growing economy becomes an important impetus for the development of financial globalization (McKenzie M, 2010).
Financial innovation
Financial innovation usually refers to the introduction of new financial products and creative things through internal reorganization and change of various elements. As the financial innovation is a broad concept of dynamic, and thus has many forms, such as currency Credit and system innovation, innovation of financial institutions, organization and management, financial system innovation, and innovation of financial instruments, transactions, operating techniques, types of services (Singh Intrachooto and Vimolsiddhi Horayangkura,2007).
The financial innovation in Australia influenced the proceeds of the globalization of the Australian financial system. The applications and development of modern information and communication technology and computer networking have brought changes in financial transactions. Financial data processing and transmission become more convenient. The computer network technology promoted the formation of a global trading system. It enables customers to enjoy more convenient and lower-cost service than ever. Any trader can get a variety of financial information through a computer terminal. Financial product innovation is the focus of financial innovation, as any financial market innovation and financial innovation is reflected in the financial product innovation. There are 500 kinds of financial innovations in the Australian financial market. Among them, the most important financial innovations are financial forwards, financial futures, financial options, financial swaps and notes issued to facilitate (Clifford W and Smith J,1991).
Financial market innovation, financial technological innovation and financial products innovation provide the necessary carriers for the financial globalization in Australia. Besides, because financial innovation can provide investors with a low-cost, highly efficient means to avoid risks, improve efficiency of financial markets and organizations and enhance the capacity of financial development, and thus has an important role in promoting financial globalization.
Financial liberalization
Financial liberalization in Australia took an important role in the globalization of financial system. In 1979, Australian Government set up Campbell investigation committee, surveying the efficiency of financial control findings. The result published in 1981, proposing introduce of floating exchange rates, abolition of restrictions on the number of loans, reducing bank reserves and the increased competition to attract foreign investment. Most of the recommendations the Commission were adopted by the Australian Government. Australia abolished financial control after that. Between 1981 and 1988, Australia abolished the official control of interest rate, credit allocation and the amount of credit. It implemented the floating exchange rate since December of 1983(Lewis and Wallace, 2000).It result that new bank poured into the Australia financial market and a large number of non-bank mutual funds went into the bank institutions. Following these, it relaxed restrictions on foreign investment in the banking industry; the structure of life insurance companies and pension funds requirement was abolished; the removal of the control of Stock Exchange and the securities industry.
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In 1996, the Australian government launched a series investigation on efficiency, competitiveness and flexibility of financial system regulation, stability, integrity and fairness. A report of the investigation known as Willis was submitted in 1997. One of the recommendations was adopted by the Australian government which laid the foundation of the current financial regulatory system in Australia. A set of legislative reforms were conducted from 1998 to 2003. From the relaxed interest rate controls to relaxed control financial operations, and further development to relax capital controls, which greatly promote competition among financial institutions. All these measures promoted the financial institutions to develop all-round and international. Reform of financial liberalization had a huge and far-reaching impact on the globalization of Australian financial institutions and financial markets (Michael W. Klein and Giovanni P. Olivei, 2008).
Australia relaxed constraints impeding cross-border capital flows, making financial institutions gradually go to the global financial markets. Australian financial liberalization laid the foundation of financial globalization, also provided a good system environment for globalization of Australian financial system.
Conclusion
From the above analysis, the development of Australia's real economy, financial innovation and financial liberalization have taken important roles in the globalization of the Australian financial system. The development of Australian economy took a base role; financial innovation worked like lubricants; financial liberalization provided a sound system environment
