As an example, a substantial proportion – about 20 per cent – of superannuation savings flow offshore, mainly into foreign equities. This reduces the pool of savings available domestically to banks and, other things equal, increases the amount of offshore funding banks need to undertake.
It is also an inescapable fact that, with Australia running a current account deficit, some funding for the economy needs to come from offshore. Households, by and large, cannot borrow offshore and the government sector has not had much need for offshore funding. That leaves the corporate and the financial sectors.