In a statement issued on Monday, the Council of Financial Regulators (CFR) — consisting of APRA, ASIC, Treasury and RBA — confirmed it will sit down with the big banks later this week to ensure continuing supply of credit, particularly to small businesses, as Australia navigates uncharted territory.
Last week, the CEO of the Australian Banking Association met with Treasurer Josh Frydenberg, confirming later that banks are well placed to assist Australians impacted by COVID-19.
CEO of the Australian Banking Association Anna Bligh said following the meeting: “Banks stand ready to support customers and if anyone is in need of assistance, they shouldn’t wait but come forward as soon as possible.
“In particular, any business financially impacted by the effects of COVID-19 should contact their bank to be assessed on a case-by-case basis to access the assistance on offer.”
Banking system well capitalised
The council echoed a similar message on Monday, underlining that financial regulators are working with the government to keep tabs on the financial market and ensure that it continues to operate effectively and that credit is available to both households and businesses.
“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. Substantial financial buffers are available to be drawn down if required to support the economy,” the council assured.
The council further explained that the funding position of the banking system is strong, with financial institutions, market participants and market infrastructure providers undertaking substantial investments in their operation capability to deal with the effects of the virus.
“At the same time, trading liquidity has deteriorated in some markets and financial institutions are having to adjust to a more volatile environment,” the council added.
“The financial regulators are in regular contact with financial institutions, market participants and market infrastructure providers.”
It assured that given the disruption caused by COVID-19, council members are examining how the timing of regulatory initiatives might be adjusted to allow financial institutions to concentrate on their businesses and assist their customers.
RBA to announce further measures on Thursday
The Reserve Bank confirmed in a separate release that it will continue to support the liquidity of the system.
It said that it stands ready to purchase Australian government bonds in the secondary market to support the smooth functioning of that market, which it characterised as a key pricing benchmark for the Australian financial system.
The central bank will also be conducting one-month and three-month repo operations in its daily market operations until further notice to provide liquidity to Australian financial markets. In addition, it will conduct longer-term repo operations of six months maturity or longer at least weekly, as long as market conditions warrant.
“The bank will announce further policy measures to support the Australian economy on Thursday,” the RBA advised.