Treasury Secretary Ken Henry says the credit crisis has reduced competition in financial markets but there are signs the situation is improving.

“The global financial market turmoil, which followed the sub-prime crisis in the United States, has had an impact on competition in financial markets globally,” Dr Henry told an Australian Business Economists’ function in Sydney today.

Dr Henry said there were signs the global credit crunch was easing but expected the problem to remain for a while yet.

“I do not expect these circumstances to be sustained, although we could be living with the adjustment process for some period of time,” Dr Henry said.

“There is, of course, also the risk for further nasty surprises as that particular crisis, or shock to the global financial system, plays itself out around the world.

“But my own view is that we will see a renewed interest at some stage in securitised products and with that there will be a return of a level of competition that many of us have gotten quite used to.”

AAP