The release today of the quarterly balance of payments data by the Australian Bureau of Statistics (ABS) revealed that gross external liabilities held by depository corporations (mostly banks, but also building societies, credit unions, and registered finance corporations) rose by $9.8 billion over the September quarter of 2013 to $642.9 billion, and are now just $12.3 billion below the peak level of $655.2 billion reached in September 2011 (see below chart).
The proportion of gross external liabilities that are short-term – that is, with a term-to-maturity of less than 12 months – was steady at 45%, and are well below the peak levels recorded in March 2001, when 62% of offshore funding was short-term (see below charts). This is good news from a financial stability perspective, since it reduces the risk of the banks experiencing difficulties in rolling-over their debts in the event that offshore capital markets freeze, as they did during the Global Financial Crisis (GFC).
The next chart shows the breakdown by component:
And the growth in the various components since the onset of the GFC in 2008 is plotted below. As you can see, offshore deposits have grown significantly, whereas long-term bonds have also increased but by a smaller amount. By contrast, the other components have all fallen over this period:
