RBA

--But not the Big Four banks! In fact, we learned over the weekend that even though foreign banks accounted for 70% of the $110.7 billion in borrowing from the Fed's Primary Credit Dealer Facility (PCDF), Australia's banks were pretty circumspect with their emergency borrowing.

--Commonwealth Bank borrowed $75 million from the Fed on July 17th, 2008. It borrowed another $25 million on November 12th. But in public statements, the bank said it only borrowed the money to make sure it could. You know, sort of the way you test an emergency key to your front door, to make sure it works when you actually need it.

--Which brings us back to last week's subject: the Reserve Bank of Australia. It won't have to deal with any embarrassing revelations when it meets tomorrow. It can focus on fixing the price of money in Australia. In this respect, anyway, it functions the same way as the U.S. Federal Reserve.
the RBA didn't formally come into existence until 1959 as part of the Reserve Bank Act. Its mission is nominally similar (and unachievable): price stability, full employment, general economic prosperity and welfare. But its board is not, at least at first appearances, entirely beholden to the banking sector.

--In fact, section 17 of the Reserve Bank Act stipulates members of the RBA's board can't be employees, officers, or directors of an authorised deposit-taking institution. This would, again at a casual glance, appear to make the board more independent of the Big Four. The Fed is controlled by its member banks. The Reserve Bank appears to keep Australia's financial industry at an arm's distance.

--Is that really the case? Hmm. We'll see. You may have noticed last week that Donald McGauchie and Warwick McKibbin have not been invited back to serve on the Reserve Bank's board once their terms expire. Both men have been critics of the RBA at times. Jillian Broadbent's term will be extended five years. And later this month the Board will welcome Queensland-based Catherina Tanna, who is currently an executive vice president for BG Group and managing director of QGC.