The past week or so has seen financial stability concerns ease a little, but even so the recent problems will result in tighter financial conditions around the world as banks reassess risk and seek to reassure depositors that their funds are secure, including by taking a more cautious approach to lending.
It is still unclear what effect this will have on global economic growth, but it is another headwind. Here, in Australia, the impact of the banking stresses overseas has been limited. Our financial markets are working well and Australia’s banks remain well positioned to provide the credit and other financial services that the economy needs.