Australia's Council of Financial Regulators (CFR) published its annual update on initiatives to address systemic risks and vulnerabilities, summarising progress in 2025 and confirming four inter-agency focus areas for 2026: preparedness for geopolitical risks, operational vulnerabilities (including cyber, third parties and AI), amplification of systemic liquidity risk, and high household leverage. In 2025, work on geopolitical vulnerabilities progressed an inter-agency program agreed in December 2024, including engagement with large financial institutions on scenario analysis and payments contingency capabilities, stronger links with relevant government agencies for information sharing and response coordination, and integration of geopolitical considerations into routine supervision by the Australian Prudential Regulation Authority, the Reserve Bank of Australia and the Australian Securities and Investments Commission. Operational and cyber resilience work included mapping key service providers, ongoing cyber stress testing through the Cyber Operational Resilience Intelligence-led Exercises (CORIE) framework and enhanced coordination on incident response, including payments cyber incidents. To address systemic liquidity risk, APRA conducted a system risk stress test exploring transmission channels between the banking and superannuation sectors, alongside strengthened coordination for market volatility and operational readiness for liquidity support. On household leverage, the CFR monitored housing and lending standards through its Macroprudential Policy Forum and Housing Forum, the RBA and APRA updated their Memorandum of Understanding to formalise a more structured process for RBA financial stability advice supporting macroprudential policy, and APRA announced limits on high debt-to-income home lending. Climate change remained a fifth 2025 focus area, with initiatives to improve transparency of climate and sustainability information, strengthen capabilities to manage sustainability-related risks and continue international engagement. The 2026 work program will be overseen by CFR Deputy Chairs with progress reported at CFR meetings, alongside ongoing coordination on a broader set of vulnerabilities including climate change, private markets, digital money and assets, and risks beyond the regulatory perimeter in non-bank financial intermediation.
Council of Financial Regulators 2025-12-01
Australia's Council of Financial Regulators publishes annual systemic risk update and sets 2026 priorities on geopolitics, operational resilience including AI, liquidity stress and household leverage
Australia's Council of Financial Regulators (CFR) released its annual update, highlighting 2025 progress and outlining four focus areas for 2026: geopolitical risks, operational vulnerabilities, systemic liquidity risk, and high household leverage. Initiatives included enhanced coordination on cyber resilience, systemic liquidity stress testing, and monitoring housing and lending standards. The CFR will address broader vulnerabilities, including climate change and digital assets, with oversight by Deputy Chairs and regular progress reports.