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The Australian government has confirmed that it will intervene in lending markets should there be any disruption to the flows of credit available to Australian businesses.
Treasurer Wayne Swan last night insisted that the supply of credit available to the economy remained adequate but signalled that if that supply did change the government would be ready to act.
“If in fact some foreign banks were to withdraw, then we stand ready to work with Australian business to ensure there is a sufficient flow of credit,” he said, according to The Australian Financial Review.
Mr Swan’s comments follow concern that a withdrawal of foreign banks could create a large undersupply of credit available to Australian businesses.
Just yesterday the Royal Bank of Scotland – a significant supplier of credit to corporate Australia – reported the largest banking loss in UK history. Such a loss could see the bank reconsider its operations in smaller markets such as Australia.
