Quarterly Statement by the Council of Financial Regulators – 23 March 2026

The Council of Financial Regulators (the Council) held its regular quarterly meeting on Monday, 23 March 2026.

The Council is the main coordinating body for Australia's financial regulators, with the ultimate aim of promoting the stability of the financial system and supporting effective and efficient regulation. It brings together the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the Australian Treasury and the Reserve Bank of Australia (RBA).

Systemic risks and vulnerabilities

The Council continued its discussion on the rapidly evolving international risk environment, following its meeting with the Treasurer, Assistant Treasurer and the Australian Competition and Consumer Commission (ACCC) last Friday. Global financial stability risks were elevated, following the escalation of conflict in the Middle East. Geopolitical risk had been a focus for the Council for some time; CFR agencies were engaged with industry and closely coordinating in assessing the implications for the Australian financial system.

The Council noted that while direct exposures of the Australian financial system to the Middle East were limited, a further deterioration of the geopolitical environment could heighten risks to financial stability and requires continuing vigilance.

Council members observed that the Australian financial system has established a good degree of resilience and is well placed to navigate a high-risk international environment. It is important, however, that banks maintain strong levels of capital and liquidity, in the context of wider CFR-industry efforts to strengthen crisis preparedness arrangements.

The Council also noted that most borrowers in Australia are in a solid financial position and remain able to manage increases in cost pressures, though some will face growing challenges. The Council agreed it would be important for lending standards to remain prudent, given the backdrop of high household indebtedness, recent strong credit growth and reports of strong competition among lenders.

Crisis preparedness and coordination

The Council conducted its regular stocktake on crisis preparedness, noting that CFR agencies have access to a comprehensive suite of policy tools they could use to respond in a crisis if needed. These included a range of market powers, liquidity operations, and policy settings, which can be introduced and/or adjusted quickly in crisis situations. The Council also noted the steps that have been taken in recent years to strengthen coordination across agencies to ensure an effective collective response to instances of financial instability, as set out in the CFR crisis management memorandum of understanding. The Council also discussed the importance of regular testing of crisis response mechanisms, including through its regular schedule of simulation exercises.

The Council reviewed progress that had been made in resolution planning with key financial institutions. The Council agreed an inter-agency workplan for the year ahead, to continue to enhance policy and operational preparedness for capital and liquidity stress scenarios.

Cyber and operational resilience

The Council was updated on the outlook for cyber and operational risks to the financial sector. These risks have been growing in scale and complexity, driven by changes in business models, technological innovation and integration, and increased dependence on third parties. The Council reviewed the program of work both within and across CFR agencies and industry to strengthen cyber and operational resilience. Joint CFR initiatives for the year ahead include the ongoing program of cyber stress testing of regulated entities through the Cyber Operational Resilience Intelligence-led Exercises framework (CORIE), assessing the emerging risks from quantum computing and managing the risks from common dependency on critical third parties.

Better regulation

Council agencies have been working together on an ambitious regulatory reform agenda, aiming to improve efficiency without compromising financial system stability. In December last year, the Council published a roadmap for better regulation, which outlined a series of coordinated activities to advance the Government’s better regulation agenda.

The Council, together with the ACCC, was updated on recent engagement with industry to streamline data collection and data sharing across agencies. CFR agencies have identified a range of actions that they can take as a result of feedback from industry, which will strengthen coordination and transparency, reduce duplication and inconsistencies in data collections and streamline existing reporting requirements. The Council agreed to publish an overview of these actions in the first half of 2026.

Other initiatives

The Council discussed a range of other topics, including work underway for the International Monetary Fund's (IMF) Financial Sector Assessment Program (FSAP). The IMF has started its 2026 assessment of the resilience of the Australian financial system, the quality of regulatory and supervisory frameworks, and the capacity to manage and resolve financial crises as part of its FSAP.

The Council, together with the ACCC, discussed wholesale cash distribution issues, including policies and initiatives to support the availability and affordability of cash in Australia.

The Council also discussed a range of initiatives that were anticipated to follow the conclusion of Project Acacia. Acacia has been a collaborative exercise between the RBA, other CFR agencies, the Digital Finance Cooperative Research Centre and industry, aimed at exploring how the tokenisation of real world assets and money could uplift the functioning of wholesale asset markets in Australia.

Council of Financial Regulators

The Council is the main coordinating body for Australia’s financial regulators. There are four members: the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the Australian Treasury and the Reserve Bank of Australia (RBA).

The Governor of the RBA chairs the Council, and the RBA provides secretariat support. The Council facilitates cooperation and collaboration across member agencies, with the ultimate aim of promoting the stability of the Australian financial system and supporting effective and efficient regulation. In pursuing this aim, the Council also seeks to support competition in the financial system.

The Council is a non-statutory body and has no legal functions or powers separate from those of its individual member agencies. It is a forum for cooperation, underpinned by the commitment of its member agencies to be open, proactive and collaborative. It meets each quarter, or more often if required.