Financial Stability Review October 2020

At a Glance

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Financial systems around the world face substantial risks

The COVID-19 pandemic is an enormous health and economic challenge which raises significant risks for financial systems around the world, including in Australia.

Households' finances in Australia have been cushioned from the impact of the pandemic by support measures

Despite the sharp decline in output and falling employment in Australia in the first half of the year, overall household income increased with large fiscal stimulus payments. Households have greatly increased their saving.

Most businesses started with low debt but revenue has fallen for many

Australian businesses generally had low levels of debt going into the crisis and income support measures, rent relief and loan repayment deferrals have helped maintain cash flow despite the sharp reduction in revenue experienced by many businesses.

The strong Australian financial system can support the economic recovery

Australian banks have high capital levels, are profitable and most of their loans are well-secured.