The Council of Financial Regulators maintained its assessment that Australia’s financial system remains resilient despite elevated geopolitical, market and operational risks. Household and business balance sheets are generally strong, while banks retain robust capital and liquidity positions and prudent lending standards. The Council nevertheless urged financial institutions to maintain sound lending practices and strengthen cyber and operational resilience as technological change and geopolitical tensions increase threats to critical infrastructure. The Council supported the Australian Prudential Regulation Authority’s decision to leave macroprudential settings unchanged, including debt-to-income limits and serviceability buffers. Although tighter financial conditions have lowered housing prices and weakened market sentiment, borrower stress remains limited and most households appear resilient to adverse economic outcomes. Authorities will continue monitoring lending practices and changes in borrower finances. Interagency work is progressing on oversight gaps involving critical third parties and crisis preparedness. A Reserve Bank of Australia and National Office of Cyber Security framework defining government and industry responsibilities during a cyber crisis affecting payments will be published shortly. APRA and the Australian Securities and Investments Commission have also issued practical guidance, including a board and executive checklist, on cyber risks associated with frontier artificial intelligence following industry roundtables involving more than 600 participants from over 380 organizations.

Original source