If they have little savings, they might need to reduce consumption in order to meet loan repayments or, more extreme, sell their houses or default on their loans. This could have adverse effects on the real economy – for example, in the form of lower economic growth, higher unemployment and falling house prices – which could, in turn, amplify the negative shock.
Before finishing, I would like to recognise that tomorrow we are having the official opening of our new banknote distribution centre and vault at Craigieburn, in outer Melbourne. This new centre is an important investment for us in Victoria. It will help us manage the task of issuing and storing banknotes nationally for many years to come.