Which country is most ahead of the regulatory curve these days? A couple of
recent developments suggest that it might be Australia.
Datapoint One: The Australian Competition and Consumer Commission seems
ill-disposed towards Google’s proposed merger with DoubleClick, worrying
that the combined entity will have the power to crush competitors. The news
comes as we learn that Yahoo, the closest thing that Google has to
a competitor, came very close, recently, to unilateral
People familiar with the matter say that over the summer, Mr. Yang did actively
assess one major sacred cow: the Web-search-advertising business it built
up at great expense in recent years. Under the scenario discussed by top executives,
Yahoo would have outsourced that search-advertising activity — which places
small text ads next to Web search results — to either Google or Microsoft
Corp., the people say. One of these people says Yahoo raised the idea with
Datapoint Two: The Australian central bank is doing its best to shore
up the asset-backed commercial paper market, by accepting such paper in
Australia’s central bank, the Reserve Bank of Australia, has relaxed rules
on collateral it will accept for short-term funding. This would enable banks
to take more time to evaluate which portions of the asset-backed commercial-paper
market are most affected by ailing subprime mortgages.
In doing so the Australians went beyond the Federal Reserve, which doesn’t
accept such paper as collateral in repo operations but did recently clarify
it was willing to accept a wide variety of such paper for its lesser-used,
and costlier, "discount window" loans to banks.
The Reserve Bank of Australia changes will begin Sept. 17 and in October will
include residential mortgage-backed securities and Australian dollar-denominated
asset-backed commercial paper. Bond yields fell sharply on the news.
This is an eminently sensible idea, and one which I hope will be copied by
other central banks around the world: it helps provide liquidity to a newly-illiquid
market without forcing the central bank into inflationary rate cuts.