The Reserve Bank of Australia has published the June quarterly statement of the Council of Financial Regulators, which said Australia's financial system remains resilient but that the outlook for financial stability requires a high degree of vigilance. Banks were described as maintaining strong capital and liquidity, and the Council supported the Australian Prudential Regulation Authority's decision in May to keep macroprudential settings unchanged. At the same time, the statement highlighted elevated geopolitical uncertainty and a more complex operational risk environment, with frontier artificial intelligence intensifying cyber risk for financial institutions. The Council said direct exposures to the Middle East were limited, but recent developments reinforced the need for stronger preparedness for a range of geopolitical scenarios. It expects financial institutions to strengthen contingency planning, including back-up payments arrangements, security controls and communication protocols. APRA has written to regulated entities on geopolitical risk management, while APRA and the Australian Securities and Investments Commission have also called for a step-change in managing cyber and AI-related risks. In discussions with the Department of Home Affairs and the Australian Signals Directorate, the Council focused on stronger coordination on incident response, third-party risk mitigation and measures such as accelerated patching, reducing attack surfaces and maintaining robust baseline cyber-security practices. The meeting also reviewed wider regulatory work. Members discussed progress on Australia's 2026 Financial Sector Assessment Program with the International Monetary Fund, which is due to conclude later in the year with a Financial System Stability Assessment report. Together with the Australian Competition and Consumer Commission, the Council also reviewed implementation of actions from the review into small and medium-sized banks and considered cash distribution issues, noting that Treasury concluded consultation in May on draft legislation for a regulatory framework intended to support a sustainable, efficient and resilient cash distribution system.
Reserve Bank of Australia2026-06-23
Reserve Bank of Australia publishes Council of Financial Regulators statement urging stronger geopolitical and cyber risk preparedness
The Reserve Bank of Australia published a Council of Financial Regulators statement saying Australia's financial system remains resilient, but geopolitical and operational risks have risen. The Council called on institutions to strengthen contingency planning and cyber defences, with particular focus on AI-related cyber threats. It also reviewed work on the IMF's 2026 Financial Sector Assessment Program, small and medium-sized banks, and cash distribution reform.