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The Reserve Bank of Australia’s Financial Stability Review released a few minutes before press time, revealed growing concerns about a slowdown in China and its repercussions on the global economy.  

Key quotes (Source: Reuters)

  • Risk global financial volatility could rise for a number of reasons.
  • Trade tensions, a slowdown in China could trigger a global economic downturn.
  • The  Australian economy is improving but the housing market has slowed.
  • Sentiment toward housing market has become more cautious, outlook subdued.
  • Drop in home prices to date has been small relative to previous gains,  rapid or large fall in home prices could disrupt financial system, household finances.
  • The level of household debt is high but does not appear to be a large risk to the financial system.
  • Debt levels could be a risk if they cause households to cut back on consumption.
  • Possible, but not likely, excessive tightening in lending standards could fuel housing slowdown.
  • The resilience of the financial system overall has improved, capital ratios are strong.
  • Banks’ returns on equity have declined but still high by international standard.