The prudential regulator modelled a scenario where house prices fell 43 per cent and unemployment rose to 11 per cent, and concluded deposits would remain safe.
The prudential regulator says Australia’s banks have the strength to withstand an economic catastrophe, as senior bankers said they had secured enough funding to wait out any prolonged financial crisis.
“It’s clear from my conversations that international authorities are prepared to do what’s necessary to reassure markets at a time of uncertainty and volatility,” the Treasurer said. “We’re not immune to what’s coming at us from overseas, but our own economy and financial system are well-regulated, well-capitalised and well-placed to respond.”
“But I think there is an issue with how we deal with the digital age. That’s the one that’s probably the biggest learning for me,” he said.Mr Lonsdale said globally regulators are working together to be able to respond far more quickly in the event of a bank-run in the digital age, hinting that further regulation would soon follow.from the Silicon Valley Bank and Credit Suisse fallout
Despite fears the downturn might prompt a pullback in lending, Mr Comyn said this strong capital position would allow banks to keep credit flowing, giving CBA’s “enormous flexibility and capacity to support our customers and to continue to extend lending”.Mr Lonsdale said banks had “expressed displeasure” about the prudential regulator’s capital requirements. But Westpac chief executive Peter King said the banks were beneficiaries of the hard line taken by APRA.
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