With the adoption of the euro, bank lending rates fell, eliminating the spreads relative to countries with a longer tradition of price stability. The availability of low-cost wholesale funding allowed banks to separate the growth of lending from that of retail funding.
Aside from the concentration, there are a couple of features of the Australian banking system that are worth highlighting. First, if we look at cost-to-income ratios, Australian banks seem to be fairly efficient (Graph 3).