Australia's financial regulatory environment is recognised as one of the best in the world for promoting stability and strength. On the issue of financial institutions' transparency, the executive opinion survey conducted for the IMD World Competitiveness Yearbook, 2009 ranked Australia fourth in the Asia Pacific region, and eleventh in the world. Additionally, Australia ranked in the top 10 for the degree to which financial risk is adequately addressed and for effective finance and banking regulation.

Best practice regulatory oversight has served to insulate Australia’s financial markets from the brunt of the credit market turmoil. The Australian Prudential Regulation Authority (APRA) has intensified its monitoring of banks in line with the recommendations handed down in the Financial Stability Forum’s April 2008 Report on Enhancing Market and Institutional Resilience, while the Reserve Bank of Australia (RBA) has provided timely liquidity support when necessary. The Australian Securities and Investment Commission (ASIC) and Commonwealth Treasury have conducted a review of the regulation of credit rating agencies in Australia, with several measures already introduced to improve oversight and increase transparency. Additionally, under The Basel II Framework, which came into effect in Australia on 1 January 2008, APRA has been working with large banks on liquidity requirements and regular stress tests to strengthen risk management practices. These measures have maintained the confidence and health of the Australian financial services sector during an uncertain and volatile period in global markets.