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Stephen Grenville

How QE would undo decades of healthy deregulation

Special purpose housing lending to swing the economy back into growth would have all sorts of dangerous consequences.

With financial sector deregulation in the early 1980s, the Reserve Bank’s monetary policy role was limited to setting the overnight interest rate, leaving financial markets to set the rest of the yield curve, together with the funding and allocation of loans.

Quantitative easing (QE) would take the RBA back to some of the pre-deregulation practices that were abandoned more than three decades ago – abandoned for good reason.

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Stephen Grenville is a former deputy governor of the Reserve Bank of Australia and a non-resident fellow of the Lowy Institute.

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    Original URL: https://www.afr.com/policy/economy/how-qe-would-undo-decades-of-healthy-deregulation-20191106-p537u3