IMF paper urges Aus bank capital boost
Wednesday 25 January 2012 - by Karina Whalley
Using stress tests calibrated on the Irish crisis experience, the IMF study shows that Australian banks could handle sizeable shocks to their exposure to residential mortgages. But if this is combined with corporate losses expected at the peak of the global financial crisis, it would put too much strain on banks' capital and force banks' average total capital ratio below the regulatory minimum, the study said.
But the Australian government said that bank regulators are not likely to change the regulations in light of the IMF's conclusions.
The country's treasurer and deputy prime minister, Wayne Swan said in response: "We have one of the best regulators in the world, the Australian Prudential Regulation Authority, they supervise our banking system and they are satisfied with the existing capital abilities of our banks."
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