Quarterly Statement by the Council of Financial Regulators – December 2023

Here is a summary of the Quarterly Statement by the Council of Financial Regulators for December 2023:

Summary:

The Council of Financial Regulators held its quarterly meeting to discuss current and emerging vulnerabilities in the financial system that could lead to financial instability. The Council identified potential risks from high household leverage, cyber-attacks, geopolitical tensions, and climate change, and agreed to work with industry to improve preparedness. The Council also addressed emerging vulnerabilities from the adoption of artificial intelligence in financial services and the potential financial stability risks. Other topics discussed included the resilience of the banking system, non-bank financial intermediation, and the regulatory architecture for Australia's payments system.

Key points:

High household leverage is a potential risk to the financial system and economy
Cyber-attacks, geopolitical tensions, and climate change pose threats to the financial system
The Council will work with industry to improve preparedness and resilience
Artificial intelligence adoption in financial services poses emerging vulnerabilities
The Council will examine potential financial stability risks from the continued adoption of AI in financial services
Non-bank financial intermediation risks will be closely monitored
* The Council welcomed the Government's Sustainable Finance Strategy Consultation Paper