The Reserve Bank of Australia published a transcript of Assistant Governor (Financial System) Brad Jones’ fireside chat setting out the Bank’s current financial stability risk framework and key areas of supervisory and analytical focus. Jones distinguished between traditional cyclical risks, where the Bank sees households and businesses as broadly able to meet debt obligations despite pockets of stress, and newer structural risks including geopolitics, operational resilience and climate-related risks, where policy “playbooks” are less developed and the emphasis is on building system resilience to a range of scenarios. A major theme was the Bank’s intensified engagement with Australia’s superannuation sector, which Jones noted is around 150% of GDP and increasingly interconnected with banks and key markets. The Bank has commenced scenario-based work with other regulators on how super funds could inadvertently propagate a system-wide liquidity shock, highlighting that super funds’ collective ownership of short-term bank debt has risen from about 5% at the time of the global financial crisis to around 35–45% now, with potential spillovers via wholesale funding markets and the Bank Bill Swap Rate benchmark. Jones also pointed to a superannuation foreign exchange hedging book of roughly AUD 400 billion in the swap market, with about 40% of offshore holdings hedged, and described ongoing work on margin and liquidity dynamics under stress and the implications of growing superannuation activity for FX swap market functioning. On other emerging issues, Jones said the Bank does not see a compelling use case for unbacked crypto or a retail central bank digital currency, while focusing its “future of money” work on tokenisation and the potential role of a wholesale CBDC as a settlement asset for digital markets.

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