(Bloomberg) — Australia’s central bank warned that a global shift of financing away from regulated banks and into private markets is making it harder for authorities to contain risks to the financial system, days after the nation’s corporate watchdog vowed to step up scrutiny of the sector.
“Changes in the nature of financial intermediation internationally, where more financing is occurring outside of prudentially regulated entities, is limiting the ability of authorities to monitor and address potential financial stability risks,” the Reserve Bank said in its 2025/26 corporate plan published Friday.
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The RBA’s mandate includes safeguarding financial stability and it chairs a Council of Financial Regulators that aims to identify and address vulnerabilities, oversee key market infrastructure and ensure adequate liquidity.
Two days ago, the Australian Securities and Investments Commission outlined its priorities for the next four years in its corporate plan, saying ongoing key areas of focus included insider trading and systemic compliance failures by large financial institutions.
Growing allocations, especially from pension funds, toward private equity, credit, and real assets are reshaping capital formation in Australia. Regulators have been particularly concerned about risks in the property sector, where private credit firms have expanded aggressively in recent years.
ASIC Commissioner Simone Constant said at a recent industry forum that the involvement of private credit in real estate could result in systemic shocks if not monitored.
In its corporate plan, the RBA also highlighted trade policy settings and geopolitical tensions among factors that could shape growth and inflation outcomes both globally and domestically.
“These factors create uncertainty and may dampen sentiment among businesses and households, incentivise a reorientation of trade patterns and supply chains, and heighten the risk of fragmentation in the global economy and/or financial system,” the report said. “In the extreme, they have potential consequences for financial stability.”
–With assistance from Sharon Klyne.
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