The Reserve Bank of Australia (RBA) Financial Stability Review (FSR) is a semi-annual report (released in April and October) that gives the RBA’s assessment of the health and stability of the Australian financial system.
Here’s a rundown of what it covers:
Domestic financial system risks
The RBA looks at the strength of banks, insurers, and other financial institutions. It assesses capital buffers, liquidity, credit quality, and how well the system could cope with shocks.Household and business balance sheets
It digs into household debt levels (especially mortgages), business leverage, and repayment capacity, since these are big sources of systemic risk in Australia.Property markets
Housing and commercial property are always a focus because of their importance to bank lending and household wealth. The Review tracks prices, rents, arrears, and lending standards.Global financial stability
The RBA assesses international risks (like global interest rates, banking stress, China’s slowdown, or geopolitical events) that could spill over into Australia.Systemic vulnerabilities and resilience
It identifies medium-term structural vulnerabilities (like high household debt, concentrated bank exposures, or reliance on offshore funding) and notes how resilient the system is to stress scenarios.Policy and regulatory developments
The FSR often includes updates on actions by regulators (APRA, ASIC, etc.) to strengthen the system, such as macroprudential measures, capital requirements, or lending restrictions.
In short, the FSR is the RBA’s “health check” on the financial system, similar to the IMF’s Financial Stability Reports but focused on Australia. Markets and policymakers watch it for warnings about emerging risks (e.g., rising mortgage stress, commercial real estate downturns, or global spillovers).
The previous RBA Financial Stability Review was the April 2025 edition. The overall assessment from the Bank was that the Australian financial system is resilient, with banks carrying strong capital and liquidity buffers. Regulators judged that while risks are elevated in some areas, the system as a whole could withstand severe shocks. In terms of global risks the Review highlighted vulnerabilities from:
- High global interest rates and refinancing costs.
- China’s property downturn and broader slowdown. Potential global banking stress or financial-market volatility spilling into Australia.
While the publication today is unlikely to impact AUD to any great extent, I'll be keeping an eye out.
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Also, note that Chinese markets will remain closed as part of the week-long holiday. Hong Kong markets will reopen today after yesterday's holiday.
This snapshot from the investingLive economic data calendar.
The times in the left-most column are GMT.
The numbers in the right-most column are the 'prior' (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.
