This paper, authored by Luci Ellis and Charles Littrell, examines the collaborative efforts of the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA) in managing financial stability, particularly during periods of potentially risky home lending booms in Australia. It reflects on the post-global financial crisis period, offering insights into the evolution of Australia's institutional arrangements for financial regulation, shaped by the Wallis Inquiry and subsequent events. The paper discusses how these arrangements influenced the agencies' responses to strong housing market activity, detailing specific interventions and the development of macroprudential approaches. It highlights the importance of interagency cooperation, APRA's financial stability mandate, and the agencies' focus on conditions in non-financial sectors, especially households. The authors provide a detailed analysis of the challenges and strategies employed to maintain financial stability in a low-interest rate environment.
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