Adrian Orr has highlighted that the financial system is sound enough to overcome the economic impacts of COVID-19. Although banks have coped well with the pandemic, the Reserve Bank has stated that insurers and non-bank lenders are more vulnerable.
“The Reserve Bank said in the central bank's annual report on financial stability published on Wednesday that banks had coped well with the coronavirus pandemic so far.
But under "severe enough scenarios, the viability of banks would come into question", it warned.
In the event of its worst-case lockdown scenario "initial modelling suggests that, without significant and timely mitigating actions, banks would fall below minimum capital requirements under this scenario," it said.
The Reserve Bank has also cautioned that some other financial institutions that take deposits from the public, and some life insurers, are already more vulnerable.” Click here to read
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