Key points from the review include:

• Households with mortgages are maintaining repayments and have built savings buffers.
• Many businesses have established financial buffers to withstand economic shocks.
• Australian banks continue to hold high levels of capital and liquidity, enabling them to support the economy during potential disruptions.

Despite these strengths, the RBA identifies several external risks that could impact financial stability, such as high and rising government debt levels in major economies, stretched asset valuations and leverage in global markets, and heightened geopolitical and operational risks.

The RBA emphasises the importance of maintaining prudent lending standards and strengthening operational resilience to safeguard against potential vulnerabilities. Financial institutions are encouraged to remain vigilant and proactive in managing risks to ensure the continued stability of Australia's financial system.