- CANBERRA, AAP – KEY FINDINGS OF RBA FINANCIAL STABILITY REVIEW:
*Substantial support from governments, central banks and other regulators has underpinned the resilience of the financial system over the past year.
*But the Reserve Bank warns against over-exuberance and extra risk-taking as asset prices rise.
*Delays in mass vaccination against COVID-19 could stall the economic recovery.
*Progress on vaccines has underpinned expectations for strong economic growth in the next two years.
*Most households remain in a good position to service debts given low interest rates, which look set to remain on hold for several years.
*The additional safety net of large mortgage prepayment buffers is also helping home owners.
*The “wealth effect” of rising housing prices is easing the RBA’s fears for distressed sales and mortgage-lending losses.
*But if housing prices continue to rise, affordability problems will intensify, particularly as income support ends for lower-income households.
*Closed international borders and changing buyer preferences bring uncertainty for apartment prices, particularly in inner-city areas.
*The end of loan holidays for households and business will have a “modest” impact on bad loans.
*Australian banks are in a strong financial position coming out of the pandemic.
*Hoarding dividends and raising cheap capital during the pandemic means Australian banks are strong.
*Superannuation funds have substantially increased their liquidity after facing significant challenges in 2020, including early access to retirement savings.
*Super funds most exposed to early release flows of $36 billion had young members who worked in industries hit hard by the pandemic.
*But fears some super funds could lose as much as one-fifth of funds under management did not eventuate.
*Cyber attacks by increasingly sophisticated perpetrators are a growing risk for financial stability.
*Globally, work has resumed by regulators on longer-term risks to the financial system, including climate change.
*Support for corporate disclosure on climate risks and closing data gaps has broadened following the USA’s decision to re-join the Paris Agreement.
Vaccine mess tarnishes RBA’s rosy review
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