Australia’s prudential regulator has reportedly asked local banks to report cryptocurrency transactions amid the contagion of the collapse of Silicon Valley Bank (SVB).
The Australian Prudential Regulation Authority (APRA) has started asking banks to disclose their exposure to crypto-related startups and companies, the Australian Financial Review reported on March 21.
The regulator has ordered banks to improve reporting on crypto assets and provide daily updates to APRA, the report notes, said three people familiar with the matter. The agency aims to gain more information and insight into banking exposure to crypto as well as the risks associated with it, the source said.
The new measures are reportedly part of APRA’s scrutiny of the banking sector following a major collapse in the global banking system. On March 19, UBS Group agreed to buy ailing rival Credit Suisse for $3.2 billion after the latter collapsed over the weekend. The takeover became one of the latest failures in the banking industry following the collapse of SVB and Silvergate.
Barrenjoey analyst Jonathan Mott told clients in a note that the situation “remains stable” for Australian banks but warned that confidence can quickly be disrupted, putting pressure on the bank’s borders.
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“Our channel checks show deposits are not being withdrawn from small institutions of any size, and capital and liquidity buffers are strong,” Mott said, adding:
“But this is a crisis of confidence and the spread of credit and the cost of capital will continue to rise. At the very least, this will increase the margin pressure that banks face, while credit quality will continue to deteriorate.
The news comes after the Australian Banking Association launched a cost of living inquiry to study the impact of the COVID-19 pandemic and geopolitical tensions on Australia. The study followed an analysis of rising inflation that showed that more than 186 banks in the United States were at the same risk of bankruptcy if depositors decided to withdraw all their funds.