Australia: Financial Sector Assessment Program-Technical Note-Systemic Risk Oversight and Macroprudential Policy
IMF Staff Country Reports, February 21, 2019
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- Australia: Financial Sector Assessment Program-Technical Note-Systemic Risk Oversight and Macroprudential Policy
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Bibliographic details
- Published: February 21, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484398906.002
Overview
- This technical note reviews systematic risk oversight and macroprudential policy in Australia.
- The paper surveys key concerns affecting the Australian financial system and examines the macroprudential policy response of the authorities.
- Current arrangements have historically worked well and are based on a culture of strong inter-agency cooperation.
- The IMF team recommends exploring options for further extending the macroprudential toolkit, providing additional flexibility in responding to significant shocks, and reducing systemic vulnerabilities.
- The slowing in the growth of household indebtedness and lower house prices suggest that substantial new measures are not required at the current juncture, but a ‘readiness’ assessment would help to facilitate the introduction of new or expanded policy measures when required.
Key concerns identified
- Substantial increase in house prices and household indebtedness.
- Rising concentration of bank exposures.
- Potential volatility from the commercial real estate sector.
Assessment of current macroprudential arrangements
- Historically effective framework grounded in strong inter-agency cooperation.
- Emphasis on ensuring that processes remain appropriate to maintain ongoing focus on stability-related risks.
- The macroprudential policy response of the authorities has been examined in the paper (details and evaluations presented in the technical note).
IMF team recommendations
- Explore options for further extending the macroprudential toolkit.
- Provide additional flexibility to respond to significant shocks.
- Reduce systemic vulnerabilities through targeted policy instruments.
- Conduct a ‘readiness’ assessment to facilitate the introduction of new or expanded policy measures when required.
Subject coverage and keywords (as listed)
- Subjects: Banking, Financial institutions, Financial sector policy and analysis, Financial sector stability, Housing prices, Loans, Mortgages, Prices, Systemic risk
- Keywords: APRA exercise, bank capital level, bank exposure, business lending, capital buffer, central bank, CR, credit constraint, Europe, Financial sector stability, Global, housing market, Housing prices, investor lending, IO loan, ISCR, lending standard, Loans, LTV lending, market share, mortgage lending, Mortgages, Systemic risk
International Monetary Fund. "Australia: Financial Sector Assessment Program-Technical Note-Systemic Risk Oversight and Macroprudential Policy" (February 21, 2019).
Content in this bundle
- Executive Summary