The paper reviews some important macroeconomic tensions resulting from the phenomenon of financial integration. These macroeconomic tensions are illustrated using Australian perspectives. The deregulation of the Australian financial markets has increased capital mobility and profoundly changed Australia’s macroeconomic policy landscape over the past two decades. Financial deregulation has been propelled by the symbiotic processes of trade liberalisation, technological change and financial innovation. Although the measurement of the degree of capital mobility is shrouded in theoretical controversy, empirical evidence clearly reveals the trends in increased capital mobility and reduction of country risk premia, despite the rise in currency risk premia confounding the achievement of real interest parity. The phenomenon of financial integration has changed profoundly the policy targets and the mechanics underpirining the operation of policy transmission channels. Arguably, the recent emphasis of inflation targeting by reinforcing central bank independence is partly in deference to the short-term policy priorities of the international financial markets, thereby downgrading traditional policy concerns for unemployment reduction and long-term growth. The case for throwing sands on the wheels of international finance to ~~gain macroeconomic policy control appears to be counterproductive from an efficiency perspective. Nonetheless, there is a strong case for reviewing profound changes that have occurred in Australia’s financial landscapes due to financial deregulation and international integration. These changes have enhanced the exposure of the financial system to systemic risk, information asymmetry, product convergence, institutional conglomeration and anti-competitive mergers. Financial integration whilst conferring the dynamic benefits of economies of scale and scope through competition has increased the vulnerability of the financial system to risks and macroeconomic instability. Therefore, the Wallis Committee (1996) appointed by the government is opportune and will examine any market distortions inherent in current regulatory structures and recommend the establishment of an internationally best practice regulatory framework to enable the Australian traders, investors to compete efficiently in the emergent borderless financial world. A robust and efficient financial system is vital for promoting growth and macroeconomic stability.