The Reserve Bank of Australia’s October 2026 Financial Stability Review finds that Australia’s financial system remains resilient, but rising global and operational vulnerabilities require financial institutions to strengthen shock absorption and crisis preparedness. Key threats include geopolitical tensions, growing vulnerabilities in global financial markets, advances in artificial intelligence and disruptions involving critical service providers. Most mortgage borrowers remain positioned to manage more difficult conditions, including a sharp fall in housing prices, although pockets of stress persist. Most businesses should also be able to manage elevated cost pressures, but some sectors face more challenging conditions. Australian banks are well placed to continue lending during a downturn, while risks from non-bank lenders remain contained because of the sector’s relatively small size.
Reserve Bank of Australia finds financial system resilient but warns global and operational vulnerabilities are mounting
The Reserve Bank of Australia finds that the financial system remains resilient, with most households and businesses able to manage tougher conditions and banks positioned to keep lending in a downturn. However, mounting geopolitical, global market and operational risks require stronger institutional resilience and crisis preparedness.