Australian banks 'fare better' than overseas counterparts

Wednesday, 11 Jul 2012

Australian banks have weathered the financial storm well, largely faring much better than their international counterparts, Philip Lowe has indicated.

The deputy governor of the Reserve Bank of Australia (RBA) explained that this is due to the strength of economic outcomes, as well as regulations and supervision.

"It also reflects the Australian banks' higher lending standards than in some other parts of the world and their relatively limited exposure to innovative, and ultimately quite risky, financial products," he noted.

Speaking to the 41st Australian Conference of Economists, Mr Lowe pointed out that Australia did not experience a financial crisis unlike many other parts of the world, although the North Atlantic difficulties are impacting the financial markets.

People need to realise that overseas activity will have an effect on the cost and availability of finance, while the resilience of the financial system needs to be strengthened.

Treasurer Wayne Swan recently told the ABC24 Breakfast show that Australia has seen high levels of investment from overseas parties, as they seek to make the most of the stable economy.

He stressed that steps taken by the government to improve stability - such as carbon pricing - have so far had a positive effect on the economy.