Reserve Bank of Australia Financial Stability Review

Says the financial system was in a strong starting position heading into the virus impacts and faces increased risks.

Headlines via Reuters:

  • regulatory authorities have been working closely together to minimise the economic harm caused by the pandemic
  • says the exceptional measures taken to contain covid-19 are having a major effect on economic activity and the global financial system
  • Australian financial system enters this challenging period in a strong starting position
  • says financial market uncertainty is elevated
  • says capital levels are high and the banks' liquidity position has improved considerably over recent times
  • says heightened uncertainty related to the pandemic is compounding the usual volatility in financial markets
  • says banks have limited need to issue debt in the period immediately ahead
  • says banks also enter the downturn with high profitability and very good asset performance
  • says the covid-19 pandemic is putting the spotlight on a number of pre-existing global financial vulnerabilities
  • says economic downturn, uncertainty and social distancing are likely to result in very little turnover in the housing market
  • says remains unclear how this will affect residential property prices
  • says with many staff working from home and from different locations, financial institutions face increased operational risks and may have less capacity to take on and manage market risk
  • says pandemic has changed the nature of some IT and cyber risks.
  • says Australian businesses generally have low levels of gearing and most have significant liquid assets
  • says in the period ahead, many households will find their finances under strain due to efforts to contain the virus
  • says more generally, tightened lending standards over the past five years or so have improved the quality of outstanding household debt
  • says with many staff working from home, financial institutions face increased operational risks
  • says fin institutions may have less capacity to take on and manage market risk

I can't see much controversial in their comments on the economic impact right now and ahead.

Full text:

The Financial Stability Review provides the Bank's assessment of the current condition of the financial system and potential risks to financial stability. It is issued half-yearly.