Australian Banks Need To Be Alert With Negative Interest Rates! - Kakiforex.com - Financial Market Media No. 1 in the World Australian Banks Need To Be Alert With Negative Interest Rates! Australian Banks Need To Be Alert With Negative Interest Rates!
InstaForex

July 13, 2021

Australian Banks Need To Be Alert With Negative Interest Rates!

 The Australian Prudential Regulatory Board (APRA) is urging financial institutions to be prepared to face the possibility of zero or negative interest rates being implemented by April 2022.


This is because, they believe that the implementation of negative rates can pose operational challenges in some circumstances.


APRA is an independent statutory authority that oversees banking, insurance and maintenance institutions and promotes the stability of the financial system in Australia.


Although the Reserve Bank of Australia (RBA) has repeatedly said that negative interest rates in the country are unlikely to happen, but APRA told that there is a possibility it will be implemented at any time.



Therefore, APRA urges banks in the country to take appropriate steps to prepare for such a scenario and at the very least, develop a tactical solution to implement zero and negative market interest rates and cash rates by 30 April 2022.


APRA considers the risks arising from banks ’lack of readiness for negative interest rates to be important as they can have significant implications for risk management, hedging, operational processes, contracts, IT and accounting systems among other areas.


The RBA interest rate has been maintained at a low of 0.10% since November 2020. Yield from the short -term treasury turned negative for the first time last month.


The APRA consultation period began in December last year and will continue until August 20, before the regulator finalizes its expectations on October 31.