Australia: Financial Sector Assessment Program-Technical Note-Systemic Risk Oversight and Macroprudential Policy

International Monetary Fund

No 2019/050, IMF Staff Country Reports from International Monetary Fund

Abstract: This technical note reviews systematic risk oversight and macroprudential policy in Australia. The paper surveys key concerns affecting the Australian financial system, including the substantial increase in house prices and household indebtedness, the rising concentration of bank exposures, and potential volatility from the commercial real estate sector. The macroprudential policy response of the authorities has also been examined. Current arrangements have historically worked well and are based on a culture of strong inter-agency cooperation, and it is important that processes are appropriate to ensure ongoing focus on stability-related risks. The IMF team recommends that the authorities explore options for further extending their 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.

Keywords: ISCR; CR; lending standard; housing market; mortgage lending; bank exposure; capital buffer; central bank; investor lending; IO loan; APRA exercise; credit constraint; bank capital level; business lending; market share; LTV lending; Financial sector stability; Loans; Systemic risk; Mortgages; Housing prices; Global; Europe (search for similar items in EconPapers)
Pages: 41
Date: 2019-02-21
New Economics Papers: this item is included in nep-mac
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