Australia: Financial Sector Assessment Program-Technical Note-Stress Testing the Banking Sector and Systemic Risk Analysis
IMF Staff Country Reports, February 21, 2019
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Bibliographic details
- Published: February 21, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484398920.002
Overview and Purpose
- Technical note describes the financial stability analysis undertaken as part of the Financial Sector Assessment Program.
- Primary focus: assessing the resilience of the banking system.
Key Findings: Solvency, Liquidity, and Systemic Risk
- Bank solvency appears relatively resilient to stress.
- Liquidity stress tests reveal some vulnerabilities given continued reliance on wholesale funding.
- Systemic risk analysis reveals a low degree of interconnectedness between the largest Australian banks and their global counterparts.
- Cross-border and interbank exposures data corroborate:
- the systemic importance of the four largest banks, and
- the view that the Australian banks are particularly vulnerable to external funding shocks.
- Cross-border analysis using country-level and individual bank-level supervisory data corroborates the view that the Australian banks are particularly vulnerable to external funding shocks given their dependence on wholesale funding from overseas.
Policy Recommendations and Analytical Needs
- Additional investment in data and analytical tools would strengthen financial supervision and systemic risk oversight.
Subject Tags and Keywords (as listed)
- Subject: Banking, Commercial banks, Currencies, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Liquidity requirements, Money, Mortgages, Stress testing
- Keywords: Australian bank, bank bill, bank capital level, bank network analysis, bank-NFC linkage, banks' funding maturity profile, benchmark bank, capital level, cash inflow, Commercial banks, Consolidated Cross-Border Claims, CR, Currencies, funding maturity profile, funding shock, Global, ISCR, Liquidity requirements, long-term debt, mid-sized bank, Mortgages, network analysis, off-balance sheet assets, risk analysis, sensitivity analysis, Stress testing, wholesale funding
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