Australia’s Financial System Inquiry, chaired by former Commonwealth Bank CEO David Murray, has released an interim report which lays out some of the huge challenges facing the Australian financial industry over the coming decades.
One of the important themes of the report is the changing nature of the global economy and how Australia’s financial industry can best position itself for performance in a changed world. It includes this chart, which shows the stunning rise – recent and projected – of Asian economies in terms of their percentage share of overall global output.
This matters to Australia because it will affect the movement of money around the world and increase the flow of capital in the region. “Currently, Australia’s trade flows and overseas commercial presences in financial services are North Atlantic-focused, whereas physical flows are Asia-focused,” the report notes. “In future, trade flows, capital raising and investment by economies in our region are likely to increase, in addition to activity in our traditional European or North American financial corridors.”