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, 2007 ranked Australia number two in the Asia-Pacific region, after Singapore, and number five in the world. This high ranking largely reflects the effectiveness of Australia's regulatory framework and reporting requirements.

In Australia, the Australian Prudential Regulation Authority (APRA) is responsible for the prudential regulation of all Australia's banks, other deposit-taking institutions, insurance companies and much of the superannuation industry. Several other agencies are involved in the regulation of these industries, including the Australian Securities and Investments Commission (ASIC), while the Reserve Bank of Australia (RBA) maintains responsibility for the overall stability of the financial system. The RBA's March 2008 Financial Stability Review indicated that Australia's banking system remains highly profitable and well capitalised. The credit ratings of the larger banks remain high, contributing to the rapid growth in their deposits over the past six months, and the ability to raise significant volumes of funds in both domestic and international capital markets. The solid position of the Australian banking system partly reflects the high quality of its assets, with the banks having less risky portfolios than banks in many other countries.