EXPLANATORY STATEMENT
STATUTORY RULES 1984 No 111
ISSUED BY AUTHORITY OF TREASURER
AMENDMENT OF THE BANKING (FOREIGN EXCHANGE) REGULATIONS (BFER)
Section 39 of the Banking Act 1959 authorises the making of regulations for purposes related to foreign exchange.
The Government decided on 9 December 1983 to allow the value of the Australian dollar to be determined by market forces and to abolish the major part of the restrictions implemented through exchange control. On 10 April 1984 the Treasurer announced that while the foreign exchange market had worked well since the dollar was floated, the depth and efficiency of the market would be enhanced by the entry of additional foreign exchange dealers. At the present time, nearly all foreign exchange dealing is confined to the trading banks. Applications for authorities to deal in foreign exchange were sought from non-bank financial institutions by the Treasurer on 10 April and are currently being assessed.
It is intended that the new dealers will be authorised by way of general authorities issued under regulation 38A(1) of the BFER. As the Treasurer also indicated on 10 April 1984 authorisation to deal in foreign exchange will not carry any undertaking by the Government or by the Reserve Bank as to the overall financial soundness or credit standing of the authorised institutions.
The operation of foreign exchange arrangements where dealers are authorised under regulation 38A(1) requires, however, amendments to the BFER. Although the major part of the exchange control restrictions implemented through the BFER were abolished in December 1983, exchange control procedures have continued to apply for the purposes of the Government’s taxation screening policies. Arrangements to monitor foreign exchange transactions for tax policy purposes which are to be applied when the new authorities are issued to an important extent will be dependent on the BFER as amended.
Sub-regulation 5(5) of the Regulations previously provided that where any foreign currency was made available by the Reserve Bank or an agent of the Bank it should be used for the purpose for which it was obtained and in accordance with any conditions imposed. The amendment to sub-regulation 5(5) broadens the scope of the sub-regulation so that it also applies where foreign exchange is obtained from a foreign exchange dealer authorised under the Regulations.
Regulation 40 of the Regulations previously provided that a person should not make a false statement to any Commonwealth officer, to any officer of the Reserve Bank or of an agent of the Reserve Bank, or to any person who issued money orders payable overseas. However, it did not cover false statements to officers of institutions authorised to deal in foreign exchange under regulation 38A. The amendment to regulation 40 provides that such a false statement would also be an offence against the Regulations.
Authority: Section 39 of the Banking Act 1959