RBA warns financial industry to prepare for ‘more shock-prone future’

• The Reserve Bank of Australia and financial regulators are warning that the economy is entering a more “shock-prone” era, with greater risks from global instability, geopolitical tensions, and rapid technological change.
• Banks and financial institutions are being urged to strengthen resilience, including holding sufficient capital, improving risk management, and preparing for more frequent economic disruptions.
• Regulators emphasise that while Australia’s financial system remains strong, ongoing vigilance and adaptation will be essential to manage future crises and maintain stability.

Australia’s financial industry needs to prepare for a “more shock-prone future” in the age of foreign interference and cyber attacks, a Reserve Bank official has warned.

The new era of strategic uncertainty has serious implications for Australia, and the financial industry has to develop more crisis and contingency plans for extreme, but plausible, geopolitical scenarios, he said.

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Brad Jones, the RBA’s assistant governor (financial system), has told Australia’s corporate leaders that for much of the past generation, financial system participants in Australia may have safely ignored geopolitics, but that was becoming increasingly difficult.

“It is critical that contingency planning efforts are directed at maintaining a minimal level of service provision in periods of stress,” he warned.

“It is in our collective interest to prepare for a financial system that is more shock-prone in the future,” he said.

He said the Council of Financial Regulators (CFR) had been working hard to ensure that Australia’s financial system was capable of weathering extreme potential shocks, but more work was needed.

He made his comments in a speech to the Australian Banking Association Conference in Melbourne on Wednesday.

The global financial order is changing, cyber risks are growing …

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Original article and photo by "ABC News"