Australian financial system’s Middle East exposure ‘limited’: Council of Financial Regulators
Make us a preferred source
Make us a preferred source on Google
The news: The Australian financial system has limited direct exposure to the Middle East, according to the Council of Financial Regulators.
But the council warned that “further deterioration of the geopolitical environment could heighten risks to financial stability and requires continuing vigilance”.
The context: The council, which includes the RBA, corporate regulator ASIC, prudential regulator APRA and the Commonwealth Treasury issued its quarterly statement on Monday.
This follows a meeting called by the Treasury to discuss financial stability on Friday and the RBA’s twice yearly financial stability review on Thursday.
The council noted “the Australian financial system has established a good degree of resilience and is well placed to navigate a high-risk international environment”, in line with the RBA’s review.
It said the nation’s banks have strong levels of capital and liquidity, while most borrowers are in “a solid financial position”.
The council further conducted its regular stocktake on crisis preparedness and noted that member agencies have “access to a comprehensive suite of policy tools they could use to respond in a crisis if needed”, including a range of market powers, liquidity operations and policy settings, which can be introduced and/or adjusted quickly in crisis situations.
An inter-agency workplan for the year was also agreed on. It includes efforts to enhance policy and operational preparedness for capital and liquidity stress scenarios.
The council discussed cyber and operational resilience, better regulation, work on the International Monetary Fund’s Financial Sector Assessment Program’s look at Australia, wholesale cash distribution issues, and initiatives expected to come after Project Acacia that would explore how tokenisation of real world assets and money could uplift wholesale asset market functioning.
