Moody’s warns on growing bank wholesale debt

Advertisement

The great flaw in Australia’s economic model has Moody’s exercised today:

Data from the Australian Prudential Regulation Authority (APRA) highlights the trend that bank loans in Australia started to rise faster than deposits during 1H2014. As a result, banks could be pressured to increase their use of wholesale funding, a development which we would view as a key credit sensitivity for the Australian banking system.

That said, any increased exposure to the wholesale funding markets is likely to be partly offset by higher holdings of liquid assets and improvements to maturity structures, supported by the implementation of first the new Liquidity Coverage Ratio (LCR) requirement in 2015 and second of the Net Stable Funding Requirement in 2019.

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:
Cancel at any time through our billing provider, Stripe
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.