(17 April 2023 – Australia) The Reserve Bank of Australia’s (RBA) latest April 2023 Financial Stability Review affirmed Australia’s banking system is resilient, well-capitalised and profitable with strong liquidity coverage.
The RBA Financial Stability Review encompasses the global financial environment, including recent international bank failures causes, regulatory responses and implications, the Australian Financial System, domestic household and business finances, scenario analysis on indebted households spare cash flows and regulatory updates.
Challenger and non-banks in particular reported business credit growth had expanded sharply, jumping 25 percent on a six-monthly annualised basis in Q1 2023 in the face of decelerating housing credit.
The system is “unquestionably strong” with the RBA emphasising several factors that place the economy well to support economic activity robustly through the current challenging economic and financial environment as recession risks rise abroad.
“The Financial Stability Review provides the Bank's assessment of the current condition of the financial system and potential risks to financial stability. It contains a number of boxes on topics of special interest, along with occasional articles”
“Global financial stability risks have increased however the Australian financial system remains strong and well placed to support economic activity. Higher interest rates and inflation are putting pressure on household budgets and financial stress is increasing among some households, but most remain resilient”
“Medium-term threats generated from outside of the financial system include the increasing intensity of cyber-attacks on FIs, the potential for an escalation in geopolitical tensions that results in disruptions to trade and international capital flows, and potential climate-related disruptions to parts of the financial system including but not limited to energy markets” the RBA stated.
