with the same term to maturity. Macfarlane (1988) concludes that a pre-currency-float link between domestic and foreign bond rates weakened in the post-float era. This study is based on data truncating in June 1988. However, the study by Felmingham, Zhang and Healy (2000) suggests that Australian rates are cointegrated with rates in six of its major trading-partner countries in the 1990s, but not in the 1980s.
Further revisions of Australia's money and banking arrangements can be anticipated. Hogan's (1999) menu of potential banking changes include the effects of asymmetric information and technical change. The presence of scale and scope economies in Australian banking suggests that further amalgamations, particularly those involving the combination of international partners, will eventuate. E-banking will create the need for banks to revise credit-supervision procedures to counter the influences of asymmetric information and the related problems of adverse selection and moral hazard. Hogan views future banks as 'design and construct' centres retaining more profitable activities and outsourcing plain vanilla banking products to service providers. The outcome for payment and clearance activities given the banks' desire to capitalise on scale and scope cost-savings is uncertain. Central banks will have a heightened interest in payments systems security for precautionary reasons.
The future of the banking system is just one of several intriguing puzzles about the future of money and banking in Australia.
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Publication information: Book title: The Cambridge Handbook of the Social Sciences in Australia. Contributors: Ian McAllister - Editor, Steve Dowrick - Editor, Riaz Hassan - Editor. Publisher: Cambridge University Press. Place of publication: New York. Publication year: 2003. Page number: 216.
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