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Commonwealth act
This Act has been repealed and is no longer in force. It is retained for historical reference.
It creates a federal regulatory framework governing who may carry on "banking business" in Australia and the Territories, and the conditions under which they may operate (ss.6–9). Non-corporate persons are barred from carrying on banking business after a transitional period (s.6). Corporations must hold an authority granted under the Act to carry on banking (s.7–8).
It gives the Commonwealth Bank of Australia specific supervisory and intervention powers aimed at protecting depositors and the public credit: it can require financial information from banks (s.12), investigate banks (ss.12–13), assume control and continue to run a bank’s business where a bank is unable to meet obligations or is about to suspend payment (s.13), and hold and pay interest on "Special Accounts" established by banks (ss.18–22).
It centralises certain foreign-exchange and gold controls. The Commonwealth Bank can require banks to transfer a specified proportion of excess foreign-currency receipts to it (s.23), buy and sell foreign currency (s.25), and the Governor-General may make broader exchange-control regulations for protection of the currency/public credit or to conserve foreign exchange (s.29). Part IV gives the Commonwealth Bank control over gold transactions when proclaimed in force, including mandatory delivery of gold to the Bank (ss.30–36).
It permits the Commonwealth Bank to set or direct advance policies for banks (s.27) and restricts certain investments by banks unless the Commonwealth Bank consents (s.28). It also authorises the Commonwealth Bank, with the Treasurer’s approval, to regulate interest rates and discounting by banks (s.39).
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Direct links to the current provisions in Banking Act 1945.
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It imposes recurring reporting and statistical obligations on banks (Part VI; ss.40–46). The Act prescribes detailed forms and directions (Second Schedule, Forms A–F) for balance-sheets, profit and loss, Australian income and expenditure, liabilities/assets within Australia, weekly clearing/debit statements, and foreign-currency positions.
It includes miscellaneous controls: restrictions on banks doing State business except with Treasurer’s consent (s.48), Treasurer and Governor-General powers to grant exemptions and consents (e.g. ss.10,38,47,51), requirements to hand unclaimed moneys to the Treasurer (s.56), limits on use of the words "bank" and "savings bank" (ss.54–55), and criminal and civil penalties for contraventions (various sections).
Corporations carrying on or seeking to carry on banking business in Australia (ss.6–9,40). Non-corporate providers of banking-like services are effectively excluded (s.6). Banks listed in the First Schedule are automatically authorised (s.8(1)).
The Commonwealth Bank and the Treasurer, who receive new supervisory, operational and regulatory authorities (multiple provisions including ss.11–15,18–25,27,29,30,39).
Bank customers and creditors indirectly, through deposit protections and rules about asset priority in insolvency (s.15(2)), and through reporting/publication obligations that disclose aggregate bank data (ss.44–45).
The Act explicitly aims to protect the currency and the public credit of the Commonwealth and to protect depositors (title; ss.11,29). To achieve that, it centralises information, control and intervention powers in federal institutions (Commonwealth Bank, Treasurer, Governor-General).
Practical trade-offs: the Act transfers liquidity and foreign-currency resources from individual banks to a central authority (Special Accounts, ss.18–22; foreign-currency transfers, s.23), and it makes banks subject to central direction on lending policy (s.27) and investment limits (s.28). Those mechanics reduce decentralised discretion by banks and concentrate decision-making with the Commonwealth Bank and the Treasurer.
Compliance and reporting: banks must deliver detailed annual and weekly financial returns in prescribed forms, verified by senior officers (ss.40–43; Second Schedule Forms A–F). Failure to comply attracts specified penalties (e.g. s.46).
Liquidity and balance-sheet effects: banks must maintain assets in Australia at least equal to domestic deposit liabilities except with Commonwealth Bank authority (s.15(1)), lodge periodic amounts into Special Accounts (s.20), and may be required to transfer sterling-equivalent amounts of excess foreign currency (s.23). Those requirements shift asset allocation and may constrain banks’ overseas operations (s.26 definitions).
Enforcement and intervention: the Commonwealth Bank may assume control of a bank’s business where it judges depositor protection requires it (s.13); courts can also direct compliance and authorise the Commonwealth Bank to take control following conviction for offences (s.53). The Act provides indemnities for Commonwealth Bank officers acting in good faith (s.14).
Key discretionary powers rest with the Governor-General (granting/variation of authorisations, s.8; making exchange-control regulations, s.29; proclaiming gold provisions into force, s.30), the Treasurer (consents, exemptions, and publication/administration functions, e.g. ss.10,38,47,48,56), and the Commonwealth Bank (investigatory and intervention powers, setting Special Account lodgment amounts, foreign-currency mobilization, lending policy directions; see ss.12,13,20,21,23,25,27).
Those officials may impose conditions, vary or revoke authorities and consents, and publish notices in the Gazette (e.g. s.8(4–7); s.7 penalties). The Act therefore creates multiple formal decision points where ministerial or central-bank discretion determines operational outcomes.
The Act permits central takeover of bank operations (s.13) and centralises foreign-currency stocks (s.23). Operational disruption is a possible mechanical risk at the point of assumption of control; the Act requires banks to cooperate and provide access to records (ss.13(3)–(4)).
Where the Commonwealth Bank sets lending policies or interest controls (ss.27,39), private banks’ competitive decisions and product offerings will be constrained to the extent those policies are enforced (penalties in s.27(1–2); s.39(2)).
This summary describes the Act’s mechanics, who pays, who decides, the behaviour changes required, and the main trade-offs visible from the statutory text (sections cited throughout).