Financial Crime World

Council of Financial Regulators Reviews Lessons Learned from Recent Economic Events

The Council of Financial Regulators (CFR) is reviewing the lessons learned from recent economic events to ensure that Australia’s regulatory regime remains fit for purpose and the financial system remains resilient in an evolving environment.

Household and Business Borrowing

The CFR continues to monitor the effects of higher interest rates and inflation on Australian households and businesses. While household finances are supported by strong labor market conditions and high levels of accumulated savings, there is already a small share of households experiencing debt-servicing challenges. Higher interest rates and a slowing economy are expected to result in an increase in non-performing housing and business loans over the period ahead.

  • Strong labor market conditions support household finances
  • High levels of accumulated savings help mitigate debt- servicing challenges
  • Higher interest rates and inflation may lead to increased non-performing loans

Non-Bank Financial Intermediation

In December 2022, the CFR undertook its annual review of non-bank financial intermediation. The review highlighted the importance of robust regulatory frameworks to support the growth of this sector.

  • Robust regulatory frameworks essential for supporting growth
  • Annual reviews ensure ongoing assessment and improvement

Climate Change Risks

The CFR is committed to helping corporate and financial institutions improve their ability to manage the financial risks associated with climate change. In December 2022, the government announced a sustainable finance agenda aimed at improving transparency in financial reporting, deepening green finance markets, and promoting sustainable finance initiatives.

  • CFR committed to helping institutions manage climate-related risks
  • Sustainable finance agenda aims to improve transparency and promote sustainability

Financial Regulation Modernization

The CFR supports the modernization of financial regulation in response to technological advancements. The government has proposed reforms intended to support innovation and consumer protection, including developing a strategic plan for the payments system and consulting on a licensing framework for crypto-asset service providers.

  • CFR supports modernization of financial regulation
  • Proposed reforms aim to support innovation and consumer protection

Central Bank Digital Currency (CBDC)

The Reserve Bank’s research project with the Digital Finance Cooperative Research Centre is exploring potential use cases and economic benefits of a CBDC in Australia. The project involves industry participants demonstrating potential use cases for a CBDC using a limited-scale pilot CBDC. CFR agencies have reiterated their support for the ongoing research on CBDC.

  • Research project explores potential use cases and benefits of CBDC
  • Industry participants demonstrate potential use cases through pilot projects

ASX Reassesses CHESS Replacement Program

The CFR discussed ASX’s announcement to reassess all aspects of the CHESS Replacement program. The outcome of this project affects an important piece of national financial infrastructure, and it is vital that ASX continues to invest and maintain the current CHESS until its replacement can be safely delivered.

  • ASX reassesses CHESS Replacement program
  • Importance of maintaining current CHESS until a safe replacement is available

CFR Agencies Support Regulatory Reforms

The CFR agencies have welcomed government announcements aimed at enhancing their ability to effectively regulate financial market infrastructures and promoting safe and effective competition for the clearing and settlement of cash equities.

  • CFR agencies support regulatory reforms aimed at improving effectiveness
  • Enhancing regulation promotes safe and effective competition