Transcript of Question & Answer Session Panel Participation at the Australian Banking Association Annual Conference

We have Joseph Longo, the Chair of ASIC; John Lonsdale, the Chair of APRA; and Michele Bullock, the Deputy Governor of the Reserve Bank of Australia. Please welcome Joseph, John and Michele, as they make their way to the stage.

Applause—

It’s great to have you all here. We’ve covered so much already. Let’s dive deeper into some of these issues. Joe, we are seeing mounting economic and inflationary pressures. The Treasurer described these as complicated, volatile times. So, from ASIC’s perspective, what do you see as some of the key priorities for regulation in these current uncertain economic times?

I think some of the key themes have already come out this morning. It’s hard not to start with digitisation and the growing expectations of technology and digitisation for our economy, and the Treasurer has talked about payment systems today. But in terms of uncertain economic times, it’s not just the uncertainty of what’s happening economically; there’s also the uncertainty of the risk and the promise that these new technologies bring. So, from a regulatory perspective, for example, ASIC is thinking about the implications of AI for the delivery of products and services. I’m still quite taken by the interest in crypto in this country. In the report that Peter King highlighted a moment ago, it really struck me—to go to new products and services involving a change of provider—that nine per cent went to crypto. After crypto came mortgages, personal loans and personal retirement funds. So nine per cent of Australians or people who responded to that survey were changing providers over a crypto product. So that’s very interesting to ASIC. The only other thing that I would say is that there are a lot of expectations around sustainable finance and climate risk disclosure. One of the concerns that ASIC has, frankly, is complacency, not getting ready in a timely manner; and, secondly, there’s a lot happening in our economy and, as the Treasurer said, a very ambitious agenda. So, from a regulatory perspective, it’s ensuring that we have a right prioritisation of those things and that we encourage the banks and everyone in our economy to adapt and prioritise accordingly.

Just on crypto, Joe, are you a Bitcoin, Ethereum or Dogecoin type of guy yourself?

I think I’ve made it very clear publicly that I’m not. Yes, I think that’s been confirmed many times; that’s right.

Michele, as for the RBA, there’s been no shortage of commentary, especially in the last 24 hours, on the use of monetary policy to curb inflation. From your vantage point, how is that all going at the moment?

That’s a difficult question. The Governor gave a speech on this this morning, which some of you might have caught up with. We are seeing some signs that increases in interest rates are starting to slow the economy. The challenge for us is that inflation is remaining stubbornly high, and it’s remaining stubbornly high in the services area in particular. But we’re not alone here; this is a problem internationally. We’re observing, I think, that the risks to inflation are remaining on the upside at the moment, and that’s the challenge. So we really are trying very hard to bring inflation back to target in a reasonable period of time, without forgoing all the gains in employment that we’ve had; but it’s very challenging, when we’ve got very sticky inflation.

John, these recent monetary policy decisions and the associated commentary have placed greater scrutiny on the serviceability buffer. Have there been any thoughts about adjusting either higher or lower or, in a Goldilocks sense, are we sort of ‘just right’ on the serviceability buffer?

Adam, good morning.

Good morning, John. I’m sorry. And now on to the serviceability buffer!

We’re constantly looking at the macro prudential settings. But I think the short answer is, as I sit here before you, three per cent is the right number. We see continued uncertainty ahead. So we’ve got a global economy with some weakness in it. Domestically, we’ve seen growth come off. We’ve got inflation in the system. There’s still the possibility for further interest rate rises. There’s the cost of living. All of these issues can affect serviceability. So, when you think about the serviceability buffer, that’s what it’s about. It’s just not about interest rates; it’s about serviceability. We do see uncertainty in the system, so three per cent, as I sit here, is the right number. Now, if the facts change, we can change too, and it’s very fluid. The one other thing that I’d add is that banks, of course, if they see a good borrower—maybe they might not pass the serviceability test, but maybe they are a good borrower and they’ve got a good track record—they can actually write the loan as an exception, and we will put out some guidance on that very shortly.

When it comes to some of those overseas uncertainties, obviously we’ve heard about SVB already and the difficulties of Credit Suisse. John, do you think that particular crisis has passed, or is there still some risk present?

I think, if you look at SVB and Credit Suisse, you could argue, ‘Well, that bit’s passed.’ But there’s a lot of risk still as we look out. So, as I mentioned, there’s global economy weakness, particularly in Europe and the US: we’ve got rates still going up there and inflation, and I talked about the domestic side, so there are certainly risks there. The good news for Australia is that we have a very sound, stable and resilient financial system. We’ve got—if you look at the prudential metrics, capital is unquestionably strong. Our banks are very liquid and well-funded. We’ve worked very hard on credit standards to lift those; they are all very strong. The regulatory frameworks that we’ve got: again, we are Basel super-equivalent, so I think people can be very confident that we’ve got a very sound, stable system. But we’re not complacent either. So there are some lessons that we can learn from over the last few months. Together with the other regulators at the FSB, at Basel, we are looking very closely at some of those. Also, domestically, the Council of Financial Regulators meets tomorrow, in fact, and these are live issues that we’re talking about.

We heard, with SVB, Peter King did share his thoughts. He described it as ‘Banking 101’, with what went wrong there. What’s your take? What was the lesson learned with what happened in that instance and overseas? Michele, I’d like to get your thoughts as well.

I think there’s a few. I mean, Peter talked about speed; that would be Number 1, I think. So, when you look at SVB and what the Fed said, there was about $40 billion of deposits left on day 1 and forecasts of another 100 on day 2. That’s about 85 per cent of the deposits in two days, so that is incredibly fast. I think there’s a real lesson there for us, for the banks, to really think about the nature of deposits: are they, in fact, sticky and how do we regulate those? I think there’s a basket of issues there. There are some broader regulatory issues, I think, that again go to liquidity: are we measuring, looking at the right things? I think there are some issues around hybrids, which go more to the Credit Suisse example. There’s the underwriting of the system, so that’s the guarantee schemes and the use of those. The trade-offs with moral hazard I think is a live issue. Also, there’s the proportionality with which we regulate and the complexity interface, so have we got that right? The last lesson, that I think is a really salient one for regulators: the Fed report on lessons not only highlighted regulation but actually highlighted supervision too. So, when you look at SVB, they had significant risk governance issues and they had liquidity issues. They were actually identified a few years earlier but, for whatever reason, regulatory action was delayed. So, in Australia’s case, we’ve updated our supervisory stance and we’ve got a constructively tough enforcement attitude. So, when we see something wrong, we might write a letter, but we’re going to stop writing letters; we’ll take action. So we’ve got to do more of that. It’s a really timely reminder, I think.

I’ll come to you in a second, John, about the whole regulation issue. What do you think, Michele? When we see what’s happened in something like SVB, should the Australian industry be scared and trepidacious, or should we be comforted—not in a Schadenfreude sense—that those sorts of things are distinctly less likely to happen here?

I think I’d concur with everything that John said. I absolutely agree that the Australian system, particularly the interest rate risk in the banking book, I think, has turned out to be—everyone highlights it. You go to international meetings and everyone says, ‘Wow, you had interest rate risk in the banking book capital requirements.’ That’s very, very important. I’d add two other things to what John has said. The first is that we used to think of systemically important institutions; actually, even really tiny institutions can be systemically important, and that’s effectively what happened. The Fed declared SVB—now, it was big but it wasn’t massive—it declared that certain institutions had effectively become systemically important. So I think we’ve probably got to broaden the way that we think about systemic issues and what is systemically important and what isn’t.

Has the bar for ‘too big to fail’ fallen significantly?

I don’t know if it’s fallen significantly. But it does mean that the regulators have to think—and this comes to my second point, in fact. The Reserve Bank is the liquidity provider, if you like; it’s the lender of last resort, but we lend to solvent institutions. I think the speed with which this happened demonstrates that the regulators have to have a much better idea very quickly. We’re not going to have a weekend anymore to solve these problems. We’re not going to be able to put things off to a Friday and then spend the weekend working on it. It’s going to probably happen quicker than that and we’re going to have to have a much better idea about how we work with APRA, for example, on what is a solvent institution and whether we should be lending to that institution. These are all things, I think, that mean that the regulators have to rethink our frameworks a little bit as well.

What do you think, Joe? Some commentators are saying that there’s a need for greater regulatory collaboration, greater cooperation. What are some of the issues that you’re working together with in this space, and what do you take from those overseas experiences?

I can’t think of a single problem or issue that we’ve discussed today that doesn’t involve collaboration; I think that’s the first point. I’d generalise that principle across our society: that the big problems we’re facing require us to work together. I think the Treasurer talked about the engagement of the ABA and among the regulators that that collaboration is continuous. The other thing about collaboration is that I think we’re dealing more and more with greater and greater amounts of complexity, data and digitisation. Part of collaboration is that we don’t want to be duplicating our efforts, because that leads to cost and other issues. Another feature of collaboration is actually navigating the complexity so that we don’t duplicate among ourselves what we’re asking for. As for the other elements of collaboration, there are just so many examples. Scams have come up this morning. Crypto came up this morning, sending money off to digital currency exchanges offshore. But the example that is very much on my mind at the moment is climate risk disclosure. We’re very close to international standards being finalised by the International Sustainability Standards Board. That’s coming our way, and the government has indicated, and ASIC has supported mandatory disclosure. But there’s a massive amount of work involved in rolling that out. Again, that all involved collaboration and not just among the regulators but with industry, the Australian energy company directors and the banks. So I think if we’re serious about solving big problems, then collaboration lies at the heart of that.

We’ll get to the climate risk thing in a moment. In an internationally connected financial system, that collaboration, of course, isn’t just domestically. Michele said that there are examples where people overseas look at us and go, ‘Wow, you’ve got that.’

That’s right.

Do we need to do more to get consistency internationally?

I think the concept of consistency is related to the idea of duplication as well. We will come to climate risk disclosure, but that’s a good example of where we all want consistency. Whether they’re liquidity standards, prudential standards or risk disclosure standards, these standards are very complex to administer. The data required on the science underlying them is very complex to administer. It’s in everybody’s interests that, as much as practicable, they’re consistent and they take into account different sizes of economies and companies. But I know, at ASIC, our international engagement continues to be very robust. I’ll be away next week. IOSCO is having its AGM and one its key agenda items will be going over the ISSB’s efforts. But I can’t think of a single important topic. Michele and John have just talked about the issues in the US, where there isn’t real-time collaboration and discussion going on with our international peers.

And, John, it’s good that there are areas where we can pat ourselves on the back and say to the rest of the world, ‘Look towards us,’ and go, ‘That’s best practice.’ What are some areas where you see other things around the world and think, ‘I’d love it if we could catch up there’? Where are areas in the regulation consistency where we could up our game?

I think it’s just being cognisant and learning lessons of others. Whether you’re talking about capital liquidity, operational risk—I think that’s a big one—and cyber data, I think they’re really evolving areas, and technology is the other big one as well. So, I mean, with all of those areas, I think we can look to others to see what lessons there are and make sure that our regulations are as robust as they can be.

When it comes to our own backyard, the recent review of the RBA, which was touched on by the Treasurer this morning, made a number of recommendations. Michele, what’s the impact of the recommendations on the CFR, the Council of Financial Regulators, do you think?

I think the review basically endorsed the Council of Financial Regulators as being something which is an essential part of the framework really of our management of financial stability and so on in this country. The recommendations though I think went to perhaps formalising things a little more, so things like restructuring the MOUs and the charter to make it clearer that this isn’t a passive group but is supposed to be a proactive group; looking at where gaps and regulation might be; looking at risks and those sorts of things; and also for there to be a lot more formality between APRA and the Reserve Bank, in terms of the Reserve Bank’s financial stability mandate and APRA’s financial stability mandates. There would be the Monetary Policy Board, for example, advising the CFR and APRA formally about where they think monetary policy might be impacting financial stability; and more formal mechanisms for how APRA and the Reserve Bank coordinate on macro prudential policy because that’s often the way we think about it: if monetary policy has financial stability implications, then it might be that macro prudential has to pick up some tools to address those. So I think they’re the main sorts of things, and I see that actually as an endorsement of the CFR and strengthening its hand.

I see you nodding there, John. What’s your takeaway from what was found in the RBA review about macro prudential and APRA’s approach to maybe working closer with the CFR?

We welcomed the recommendations on APRA and macro prudential. We put out a framework, I think it would be two years ago now, that really set out how we think about macro prudential: the objectives, the scenarios, and the tools and how we might use them. So the review actually looked at that, noted it and made no recommendations on that. So, in terms of how and what we’re doing, I think that is an endorsement and we would keep doing that. I think, as Michele said, the big area that they homed in on was really the collaboration and cooperation between APRA and the Reserve Bank. There’s a very close relationship between the organisations, but I think it is fair to say that it is more informal than when you look at other overseas jurisdictions. So I think it’s a good test for us to say, ‘Actually, can we add a bit more formality around that; can we be a bit more transparent around that, updating the MOUs and the advice?’ I think all of that is really good, so we’re going to lean into that and do that together.

The theme for this couple of days is ‘time of transition’ and, when we heard the Treasurer speak, one area that was really in the spotlight was the payments system in general. What are the Reserve Bank’s priorities, do you think, when it comes to payments system regulation and evolution, Michele?

So many priorities. There are a couple of main things at the moment. I think the payments system regulation at the moment, the framework, is really out of date. When I started in payments in 1998, payments basically were made up of people who were paying and people who were receiving and then the bank for the person who was receiving and the bank for the person who was paying, and they were banks. They weren’t anyone else; they were banks. That system now is just so completely different. There are people, firms, doing all sorts of chunks of the payments’ chain. The current payments system regulation framework isn’t really fit for purpose, so the priorities are really to get that framework updated, which the Treasurer has announced a consultation on. The strategic priorities for the payments system are also really important, and I think it’s really important that the government is buying into this for some things that we are going to be facing into here. For example, there’s the potential closure of the cheque system; another one that we’re going to be facing into is the decline of cash and what that implies. We really need the government to be leaning into these issues, as well as the Reserve Bank having responsibility for trying to deal with them. So, if I had to say what some of my priorities were, there’d be some of the things on the legacy side, which is how we’re handling the decline of cheques and cash. But on the other side, we’ve got big priorities in terms of the future of the payments system: how do we handle things like stablecoins, which currently probably are not regulated; how do we handle things like crypto currencies; and what do we do with central bank digital currencies? So I think there’s a whole set of priorities which are looking at the future of payments. John used the term ‘leaning in’. The regulators have got to move with this because, if we don’t, things will move quickly without us.

Joe, on payments and on cheques, I’m old school and I love a cheque. When someone wins Powerball, will they still have a big novelty cheque with $100 million written on it? Can we still at least do that?

I think we can still look forward to those images. I just want to make sure that the $100 million goes where it’s supposed to go; I think that’s the critical point there.

But fascinating and far-reaching changes to a very central system were discussed this morning. Are you happy to see that on the agenda?

Absolutely. I think we all have an interest in productivity, in embracing technology and in embracing the use of data. But, lest we forget, we don’t have much of a choice here. We were talking about global developments and developments outside of Australia, and I think the word ‘ecosystem’ has been used several times. We have to do this; we don’t have a choice. The choice that we do have is about how quickly we move, what the solutions are and what sort of transition time we give ourselves. Michele mentioned CHESS replacement; that’s just such a fundamental part of our infrastructure in Australia. Some of you may have noticed that the first special report was published a few days ago. The ASX published its report on its current CHESS readiness and the current integrity and robustness of CHESS, and there are two more special reports to come about the future. But that’s an excellent example of where we had world-class infrastructure, but it’s under pressure now and it has to be replaced. I think Michele also alluded to the need for competition in clearing and settlement, and we have market infrastructure reforms coming. The other word that comes to my mind as a regulator is ‘ambition’. We have a very full agenda here. We’re trying to deal with the ASX, we’ve got climate risk disclosure and there are all the points that Michele was making. We have crypto coming where there are other law reforms that are imminent and yet to be enacted. So it’s a big challenge for all of us to absorb all of that change and to make sure that the benefits of it, the reasons we’re doing it, actually materialise.

Could I just add something on that.

Yes, Michele, please.

I think the payments system used to be the plumbing; no­one was interested in it and it was just there. It’s actually risen to prominence now and it’s a really important part of the economic ecosystem. There’s a payments ecosystem, but it’s part of the economy, and we’re after competition to lower the cost of payments; that’s what we want. But what has increasingly become obvious is that the safety and resilience of payments is really important as well. So we’ve got this dual issue now. We’ve been concentrating for so long on trying to get competition in payments and lower the cost of payments in the economy but, at the same time now, we’re going to have to start focusing on safety and resilience; so that’s going to be a challenge.

You absolutely read my mind because they seem to be the two sorts of philosophical drivers, don’t they? There’s the efficiency, the increased dividend to the consumer, speed of the system and modernisation. But also a big part of what the Treasurer was saying was ‘strengthening the system’. One thing on the agenda there, to you John: APRA’s multi-factor authentication means that you’re possibly reviewing CPS 234. Anyone in the room who is not up to date on that—I mean, I obviously know what CPS 234 is. But, hypothetically, if I had no idea of what that was: what is it, and what types of things do you think need to be looked at on the strengthening of cybersecurity standards?

That’s a great standard. It’s one of 50 that APRA have and it’s the standard that deals with cyber, so it’s very important. Cyber resilience and data operational resilience is a big strategic priority for APRA and it’s something that we have been pushing into for a number of years now. We’re expecting entities really to be testing their systems to make sure that they’ve got the controls on this right and thinking about scenarios and things that could go wrong on data, like basic stuff: know the data that you’ve got, know where it is and know what’s important. What we’re encouraging entities to do a bit more now is to question whether they actually need some of it. So, sadly, it’s not really an ‘if’ but a ‘when’ there’s an attack, actually making sure that entities can continue to do the functions that they need to do: critical things to support their customers and to support the community. So that’s what we’re pushing into and that’s what we want. MFA: like, we put out some guidance on what we expect there. As for 234, we’re doing something on that standard that we’re not doing with any of the other 50, Adam, that we’ve got; that is, we’re requiring an independent audit by every regulated entity against that standard. So that is pretty intrusive. Some of the results are coming through, and I think it’s fair to say that there’s room for improvement. So boards have got to lean in more. I meet a lot of boards and there isn’t a board that I meet that isn’t aware of these issues. But, because the risk is constantly evolving, boards and management have actually got to constantly evolve with the risk as well. Controls: they’ve got to be better updated and actually thinking about third-party, fourth-party and fifth-party safety, I think, is a really big issue as well as data. So CPS 230, another number, another standard, will come out. That’s going to be a key one that’s going to strengthen operational resilience. It will improve business continuity but, most importantly, it’s going to push into regulation for material service providers. So we want to see that happen. And that hopefully —I’m sure it will—strengthen the system that we’ve got.

It was Robert Mueller in a previous incarnation who was at the FBI and he had that great quote: ‘There are only two types of companies: those who have been hacked and those who are yet to be hacked.’ It’s such a volatile threat-filled environment at the moment that it’s understandably front of mind. The other thing—shifting gears a little bit—that we heard about this morning is climate transition, and we’ll be discussing it over the next couple of days. We’ve heard for so long that businesses and other players just crying out for certainty and a map forward. Michele, how is the RBA viewing the implications of climate change; how is the Bank preparing for them?

Yes. I think our focus—I’m going to let John and Joe speak for them, but our focus is really twofold, I think. One is (a) for the potential implications for monetary policy of potential issues here. Some of the things that we’re concerned about are potential supply shocks. For example, extreme weather events: what do these sorts of things do to inflation and what does that mean for our monetary policy thinking and framework? The second thing is the transition, the investment that’s going to be required: what is that going to mean for the Australian economy; how do we, as the Central Bank, navigate that; and what does it mean for financial stability? I know that John will have more specific thoughts on that, but we do need to think about the impact of the physical and the transition risks on insurers and banks in particular but, more broadly, through the financial system. I think the focus here really is on making sure that they’re aware of the risks. Scenario analysis is becoming increasingly important; it’s used internationally and we’re using it here. So these are the things that we’re focusing on in terms of climate.

I’ll come to you in a second, John. Joe, where do you see this? Across industry, insurance has been seeing this for ages. The science has been seeing this for ages. Some industries have; others are really dragging their heels on what has been told to be sensible timetables reform. Where do you see this—

I see this as the biggest change of a generation in terms of our approach to disclosure and our approach to investment. So sustainable finance is rewriting our whole approach. I think the key points from my perspective are, while we’re going through this transition, there’s a real greenwashing issue. We talked about investment scams earlier. But across superannuation, insurance and every form of investment activity and consumer activity, there’s a real issue about greenwashing, and we don’t want consumers and investors misled. There’s a big capital raising issue here. One of the themes in our discussion so far this morning is ‘international alignment’ and a big part of that ecosystem is having consistent standards. Part of the point of that is that we are a net importer of capital and so, if we expect people to invest in Australia and in our companies, there needs to be a consistent taxonomy, a consistent approach to disclosure. So the stakes are really, really high. The only other point I’d make for this morning’s purposes is that the scale of the complexity of this transition is huge. So, for the bigger end of town—I’ll call them the ‘ASX100’—the state of readiness is actually not too bad. I mean, I get a lot of feedback that there’s still a lot of resources that go into it. The area that I’m more worried about is the smaller end of town, the smaller businesses, everybody else, because the investment required—well, (1) to ascertain what the standards are, and we’re close; but there’s an upskilling issue within our economy among accountants and lawyers, sort of upskilling everyone who has to apply these standards. They need help. There’s a massive education and facilitation aspect to that. Then there’s a question of scalability: whatever standards we end up with can work through the economy. I know that, in the end—and this is something that I really want to stress—the expectation is that governance in Australia is just going to keep going up, and we’ve heard John and Michele talk about it. In the end, entities, companies, banks and superannuation trusties are all run by people—they’re called ‘directors’, generally speaking—so my expectations and ASIC’s expectations of governance are just going to increase. We’re talking about a very sophisticated set of expectations, and that’s the other key to this: high standards of governance.

It’s even the challenge of arriving on a set language and an understanding of definitions of what certain things mean, and you’ve got your ‘greenwashing’. Also, the big one now is ‘greenhushing’, and ‘greenhushing’ is organisations doing things but not mentioning them yet, for fear that they’ll be judged the wrong way because there’s such uncertainty and confusion now.

Yes. That’s an emerging issue. I’m with the group that says ‘disclose and talk about what you’re doing’. I think greenhushing is not a good thing, to the extent that it exists. In my mind, the words that I would use: it’s a ‘failure to engage’. And by keeping your head down, for that reason, you’re not really engaging with consumers, investors and the economy.

John, the Treasurer covered a lot this morning. There was a brief mention of climate risk being factored into APRA work. He didn’t go into it in tremendous detail, but did your ears prick up when you heard that phrase? Where do you see the land there?

That’s been a big focus of our work for some time, Adam. We’ve talked about liquidity risk; we’ve talked about operational risk and credit risk. This is another form of risk. What we’re saying to entities is, ‘You need to be aware of that.’ So we’re not telling entities what they should and shouldn’t do and where they should and shouldn’t land. But what we’re saying is, ‘You need to be aware of it and you need to factor it into your decisions, and we want to see that.’ So we’ve had a climate vulnerability assessment—a pilot, if you like—where we’ve looked at a few entities and run a couple of scenarios, and there are some really interesting sorts of results out of that: well, actually climate risk does affect the balance sheets of regulated entities; it effects some areas more than others; and it effects some industries more than others. So, when you’re going about your business, you need to be aware of that. The taxonomy, I think, is really important because they’ve got to be able to measure this. And we’re engaged, not just domestically but with international regulators, on this broader work. So it’s not just an Australia issue but a global issue, and the transition is critically important. The final thing I’d say is that it links directly to insurance affordability. You mentioned insurance before. They’re not separate things. That actually links directly to it, and that is something that we are very interested in.

It’s all about managing risk. I’m going to finish by taking a massive risk and just swing at the panel with a closing question to you all, completely cold and off the bat. We’ll be talking so much over the next couple of days about challenge and opportunity. The Treasurer spoke of this big decade ahead of us. So I’d love each of you, in just 15 to 20 seconds, to give us one challenge that’s front of mind for you but also one uplifting opportunity; it could be banking or it could be the economy in general. But give us one challenge and one opportunity that are both really top of your thinking at the moment. I’ll start with you, Michele.

Gee, thanks! There are so many. I’d say that the big challenge for me at the moment is thinking about AI and the potential implications of that for the work that we’re doing at the Bank. It’s not only about the payments system; I think it’s more generally about the whole cyber risks thing. It’s a big challenge. The opportunity I think is actually AI too. The reason for that is that I wonder if, as regulators, we can harness some of this. It can help us to do our jobs better, but we do need the frameworks to get on top of it. So that is, I think, the challenge and the opportunity.

Fantastic. John, one challenge and one opportunity.

I think, when I look at APRA’s mandate and what the Council of Financial Regulators is doing, safety of the system is just paramount, so thinking about how we can continue to keep the system safe. Some things kind of appear constant, but other things are changing in nature. I think Michele is exactly right: I mean, AI and technology. When I think about the financial system inquiry and where we kind of were in 2014 to now, so much has changed, and technology is the one thing where I would say: we’ve got to be aware of how that links to the safety, and I think that is an opportunity as well.

You’re in a great spot there, Joe, because you’ve had a little bit longer than the rest of the panel to think about it, but there’s a chance that they’ve cherry-picked and taken the things that you were going to say. I’m backing you in here.

I’m going to be shameless.

Fire away.

I’m going to be totally shameless. I’m going to echo what Michele said. We’re talking about both sides of the same coin. So the big challenge—this is something that ASIC is working on right now very intensely—is how these new technologies—we’ll call them AI for now; they’ve exploded on to the scene—will manifest themselves in new forms of misconduct and new forms of harm for investors and consumers and, frankly, a new challenge for us is to investigate that. We’ve all heard of the black box, and underlying all of this are algorithms; someone has to explain how they work and how the variables interrelate to one another. So that’s a huge challenge and that is happening right now in various sectors. But, of course, therein also lies the opportunity. I think here we don’t have much of a choice. I think I made this point a moment ago: with the technologies, the data and the AI, we live in an interconnected world with very high community expectations around service delivery. As for the humble subjects of getting a drivers’ licence or paying a bill, these basic things, society’s expectations are that those things will happen safely, quickly and very inexpensively. There’s the opportunity, but there’s the challenge as well.

And it is why this is such a fascinating time of transition—

That’s right.

that we’ll talk about over the next couple of days. Please, thank them so much for their contribution this morning: Michele Bullock, John Lonsdale and Joe Longo. Thank you so much, the three of you.

Thank you, Adam.

Applause—