Financial regulators watch credit, housing

Angus Livingston
(Australian Associated Press)


Australia’s top financial watchdogs are looking closely at credit and lending conditions, especially for small business and housing markets outside the major centres.

They’re also looking at the impact of “stablecoins” – cryptocurrencies pegged to the value of a commodity or currency – and the potential implications for Australia.

The Council of Financial Regulators met last week and on Monday revealed the four watchdogs had focused on credit and housing.

“Housing credit growth has been subdued, particularly growth in credit to investors. The major banks have seen slower growth relative to other lenders,” the council said in a statement on Monday.

“Subdued credit growth has been primarily driven by weaker credit demand, though loan approvals have picked up recently.”

But while the potential for risks to financial stability from falling housing prices in Sydney and Melbourne has dropped thanks to prices rising in the past few months, it’s a different story in other cities.

“Prices have continued their prolonged decline in Western Australia and the Northern Territory and so the prevalence of negative equity for borrowers in those regions has continued to rise,” the council said.

“The council also discussed the continuing tight credit conditions for small businesses, with little growth in credit outstanding over the past year.”

The council is made up of the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, the Australian Treasury and the Reserve Bank of Australia.

It also examined the potential implications of “stablecoins”, particularly those linked to large, stable networks.

A stablecoin is a cryptocurrency asset designed to keep a stable value relative to a commodity or currency.

“Council members stressed the benefits of having a flexible, technology-neutral regulatory regime in dealing with these and other innovations,” the statement said.


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