RBA panics about bank funding stress

You can always tell when the RBA is getting worried about bank funding stress because it begins with the propaganda. After noting the stress in its recent statement for the first time as a factor in the cash rate discussions, today Chistopher Kent aims hose the issue off in a new speech:

I’d like to thank the Australian Office of Financial Management for the opportunity to address the forum here in Tokyo. Today I’ll discuss some of the interesting features of the Australian fixed income market and how that market has evolved over the years.

The Australian financial market is very much part of the global capital market. Indeed, the extent of that integration has increased progressively over time. Over the past decade, foreign capital coming into Australia from the major advanced economies has increased by more than those economies have grown (Graph 1). For example, as a share of Japan’s GDP, Japanese investment in Australia is now around three times the size it was 10 years ago.