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Tuesday, 14 October 2008
Page: 8962

Ms JULIE BISHOP (2:45 PM) —My question is to the Treasurer. Will the Treasurer advise the House what implications there may be for the commercial paper market following the government’s decision to guarantee bank deposits and wholesale bank funding?

Mr SWAN (Treasurer) —The very first implication is that it will put much more confidence back into our deposit-taking institutions.

Mr Hockey —Answer the question.

Mr SWAN —You could not get anything more fundamental to the commercial paper market, to the health of households or business than actually putting confidence back into the system and making sure that liquidity flows again. That is the whole problem globally and in this country because there is a credit crunch on and banks are not lending to each other. Accessing commercial paper has also become nigh on impossible. So the very first thing that has to happen—and all of the leaders that gathered over the weekend were intent on this—is making sure that we did everything in the first instance to strengthen our deposit-taking institutions as the first step in freeing up lending in economies around the world. That is absolutely critical and that is why we took the step that we did, because the arteries of the economy have become clogged because credit was not available. The economies around the globe were choking and, of course, commercial paper was part of that. Doing what has been done here but also doing what has been done internationally is absolutely fundamental to getting liquidity flowing again.