Michele Bullock: Financial stability through the lens of business

Address by Ms Michele Bullock, Assistant Governor (Financial System) of the Reserve Bank of Australia, to the Toowoomba Chamber of Commerce, Toowoomba, 8 August 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Thank you to the Toowoomba Chamber of Commerce for inviting me to speak with you today. It is a pleasure to be here.

I have spoken about financial stability from a number of perspectives in the past - resilience of the banking sector, developments in the property sector and developments in the household sector. Today I want to talk about financial stability from the perspective of the business sector. In our regular Financial Stability Review, we always discuss the corporate sector balance sheet and its resilience. Today I want to draw out some of the issues we have been focusing on in recent months.

But, first of all, what is financial stability and why is it important? As I have said in the past, there is no universal definition. But basically, it is when the financial sector is doing its job of facilitating a smooth flow of funds in the economy to support economic growth. The opposite, financial instability, is probably easier to picture though. This is where the financial sector is experiencing disruptions so that it harms the economy.