Australia's Council of Financial Regulators published its quarterly statement outlining its latest assessment of systemic risks to the Australian financial system and its cross-agency work on cyber resilience, crisis preparedness, sustainability-related data and competition in banking. The Council signalled the need for heightened vigilance by banks and other financial institutions given an uncertain international outlook and rising cyber risk, and it set out next steps for its Review into small and medium-sized banks being conducted with the Australian Competition and Consumer Commission. Key risk themes included geopolitical tensions and policy uncertainty, low risk premia and increased leverage in parts of global markets, and the potential for disorderly asset price corrections following adverse shocks. While household budget pressures were described as widespread, loan arrears remained contained and banks were assessed as highly resilient due in part to strong capital and liquidity; the Council also discussed how different interest rate environments could affect financial stability. The shared cyber and operational resilience program will focus on service provider concentration risk, testing crisis management and cyber defence plans, and building back-up payments capabilities, alongside further crisis simulation exercises and targeted testing of inter-agency coordination protocols. On sustainability-related data, the Council highlighted challenges for firms in estimating and disclosing inputs such as scope 3 emissions. For the small and medium-sized banks review, the Council noted stakeholder feedback from a consultation that closed in early February, including proposals to adjust regulatory and legislative frameworks to enhance proportionality and transparency, and it plans to provide a final report to the Government by 1 July 2025. The Council also endorsed publication of its response to the consultation on reassessing the case for central clearing of bonds and repos, and it expects to publish an updated Council Charter later this year.
Council of Financial Regulators 2025-03-14
Australia's Council of Financial Regulators flags heightened systemic and cyber vulnerabilities and plans 1 July 2025 final report on small and medium-sized banks
Australia's Council of Financial Regulators released its quarterly statement, emphasizing systemic risks such as geopolitical tensions, low risk premia, and cyber threats, while noting banks' resilience due to strong capital and liquidity. The Council plans to deliver a final report on small and medium-sized banks to the Government by 1 July 2025 and will publish an updated Council Charter later this year.