In its semi-annual Financial Stability Review (FSR) published on Thursday, the Reserve Bank of Australia (RBA) said that “the Australian financial system resilient, risks contained.”
Additional takeaways
Risks include stress in china’s financial sector, lack of significant response from Beijing.
Low global risk premia, high leverage increase danger of disorderly downturn in global asset prices.
Financial system vulnerable to digitalisatiion, concentration of ai/cloud providers.
Growth of superannuation to one quarter of financial system could amplify shocks.
Risk of widespread financial stress in australia remains limited.
Small but rising share of australia home borrowers falling behind on payments.
Only around 2% of all owner-occupier borrowers in real danger of defaulting.
Less than 1% of owner-occupier loans more than 90 days in arrears.
Around 0.5% of home loans in arrears estimated to be in negative equity.
Vast majority of borrowers expected to be able to continue servicing debt.
Sees risk households could take on excessive debt once interest rates fall.
Australian banks well capitalised, profitable and have low exposure to bad debt.
Strengthening operation resilience of banks a priority for regulators.
Market reaction
AUD/USD was last seen trading 0.18% higher at 0.6835, underpinned by the encouraging FSR report.
Source: https://www.fxstreet.com/news/rbas-fsr-australian-financial-system-resilient-risks-contained-202409260139