Anti-crypto war: Australian banks required to disclose vulnerabilities
Given the current state of affairs in the international banking industry, the Australian regulator appears concerned about the possibility that the contagion may spread to their country. As a result, they want to remain one step ahead of the situation. While Silicon Valley Bank, Signature Bank, and, more locally, Swiss credit have been experiencing significant challenges, Australian banks have a valid reason to be concerned about a deterioration in their circumstances, which causes the authorities to be concerned. This is especially the case with the Australian Prudential Regulation Authority (APRA), which oversees national financial activities and which reportedly asked banks to provide it with their crypto exposure figures. APRA is particularly concerned with the amount of exposure that banks have to cryptocurrency. Although this information is not official, sources that are familiar with the situation claim that the Australian regulator appears to be pressing. To conduct an inventory check, head to Sydney, which is located in the southeast of Australia.
The authority in charge of regulating financial institutions in Australia is beefing up its oversight of banks.
We don’t know where the sources for the Financial Review came from because of things like noisy corridors or missing information. Nonetheless, it is almost clear that the ARPA requested a comprehensive report from the national banks regarding their exposure to cryptocurrencies held by startups and enterprises. If we are to accept the sources of the Australian media, there would be the talk of daily exchanges with the regulator regarding the exposure of banks to anything directly or indirectly related to cryptocurrencies like bitcoin and Ethereum.
The events of the past few weeks, which have witnessed the bankruptcy of Silvergate Bank, the Silicon Valley Bank, and certain Signature Bank simply in the United States, are to be credited with this decision, even though it is unofficial. In the days that followed, the movement made its way to Europe, and more specifically to our allies in Switzerland, where the Swiss credit market was compelled to sell to the Union of Swiss Banks (UBS). And even though all of this is not necessarily linked from a purely economic point of view, there is a widespread movement of suspicion towards the banks, which may travel across the ocean and end up in Australia.
The goal is to stave off a panic-driven rush for the exits of financial institutions.
So yes, in addition to the dangers linked to the sound management of these financial institutions, the possibility of a bank run is in fact what causes banks the most concern. The prospect that there may soon be insufficient liquidity and that customers will hasten to their banks to withdraw their funds terrifies the regulator. On this topic, Jonathan Mott, an analyst at barenjoey, continues to maintain his optimism for the time being because he would have assured his customers that the situation was stable. Nonetheless, everything is subject to rapid change.
The following is what he had to say to the press:
“Based on the findings of our field checks, it appears that smaller financial institutions are not losing deposits, and both their capital and liquidity reserves are healthy.” Yet on top of the loan shortage, there is now a crisis of confidence, which will further pressure on the margins that the banks are already facing.
In general, there is little cause for concern provided that less significant savers do not succumb to a state of panic. In addition to this, it is the topic of an investigation carried out in the United States, which concluded that around 200 financial institutions would go out of business if their customers opted to get their money out of the bank.
So all that’s left is for someone to explain to us the connection between having exposure to bitcoin and the possibility of a bank run. For quite some time, Credit Suisse has not been forced to make problematic choices because of cryptocurrency. But we are aware that Australia’s participation in the global anti-cryptocurrency movement is predetermined to demonstrate to the general public that the misfortunes that are occurring are the fault of our industry and that this has nothing to do with the dreadful management or the increase in interest rates being imposed by central banks.