Stevens says no Securency cover-up

Stevens says no Securency cover-up

Stevens says no Securency cover-up

Updated 24 August 2012, 15:22 AEST

The Reserve Bank governor Glenn Stevens has rejected suggestions that senior RBA officials knew of and covered-up bribery allegations.

Giving testimony to the Federal Parliament's House of Representatives Economics Committee, the head of Australia's central bank says it has been transparent with information regarding its two currency making subsidiaries, Securency and Note Printing Australia, which are alleged to have bribed foreign officials to win note printing contracts.

"There was no attempt to hide any information," said Mr Stevens told the committee.

"There was no cover up."

Mr Stevens says a review conducted by law firm Freehills in 2007, which saw a document referred to in a story on the ABC's 730 program earlier this week, concluded there was no evidence of illegal activity.

"It's been claimed by some that the written statement provided by the NPA manager contained clear evidence of corrupt behaviour," Mr Stevens said.

"In 2007, two senior legal practitioners from a leading law firm who received this material directly from the author as part of their review, and interviewed the author and others, did not view it that way in coming to their conclusion that there was no evidence of a breach of the law."

This boom is different

The Reserve Bank governor also took the opportunity to again talk up the prospects of the Australian economy, and downplay the chances of a resources crash.

Glenn Stevens says past commodity booms, both in agriculture and mining, were hampered by an inflexible economy that resulted in over-optimism, rampant inflation and a crash.

"Terms of trade booms if they're not adequately handled can engender excessive optimism and then set you up for a crunch," he observed.

"What is interesting about this boom is - I'm the first to acknowledge that the miners would say where are the skills and the labour and so on and others are saying it's really hard, yes that's right - but the overall economy, we've come through this without a big break out in inflation and I think we'll come through it without a slump at the end.

"And I think key to that is a floating currency and much improved structures for macroeconomic policy and a more flexible economy generally."

Mr Stevens also confirmed that the RBA has not intervened in currency markets to influence the value of the Australian dollar.

"We haven't done any intervention intended to affect the price," he said.

And he warned that a decision to intervene in currency markets should not be taken lightly.

"There are not inconsiderable risks that the taxpayer would effectively take on with extremely large scale intervention," he cautioned.

Mr Stevens also highlighted the mixed success of previous currency interventions by central banks around the world.

"In the past, interventions of reasonably substantial size at the right moment that send a signal can, apparently, have some impact," he said.

"The kind of intervention that's trying to stand in front of a huge tide quite likely may not be that successful."