In brief - the Council of Financial Regulators (the Council) has this morning released a statement of assurance on Australia's financial system amid the disruption to business due to COVID-19.
The Council is the coordinating body for Australia's main financial regulatory agencies consisting of the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the Australian Treasury and the Reserve Bank of Australia (RBA).
Amongst other things the Council reaffirmed:
Impact of COVID-19 on the economy and banks
- Australia's financial system is resilient and it is well placed to deal with the effects of COVID-19
- The banking system is well capitalised and is in a strong liquidity position
- The funding position of the banking system is strong
- Substantial financial buffers are available to be drawn down if required to support the economy
Impact of COVID-19 on lending and credit
- APRA and ASIC acknowledge the importance of the continued flow of credit to affected customers and industries in the current environment
- The Council will be emphasising the importance of a continuing supply of credit, particularly to small businesses
- Banks and other lenders are therefore encouraged to work constructively with affected customers during any period of disruption
- The Council is meeting with major lenders later this week to discuss:
- how they can best support households and businesses through this challenging period
- whether there are impediments to lending that Council members could help to address
APRA has, for some time well prior to the emergence of COVID-19, been working with banks and other regulated institutions via the prudential standards and other measures, to address systemic and contagion risk and as acknowledged by the Council in its current statement, Australia's financial institutions, market participants and market infrastructure providers have undertaken substantial investments in their operational capability to deal with the effects of the virus.
The Council's full statement can be read here.
This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2021.