The Reserve Bank of Australia (RBA) released its October 2026 Financial Stability Review on 1 October, finding that Australia’s financial system retains a good degree of resilience despite mounting global and operational vulnerabilities. Most mortgaged households could manage difficult conditions, including a sharp fall in housing prices, supported by positive home equity and household savings buffers, although pockets of stress remain. Most businesses should withstand elevated cost pressures, but some sectors face more challenging conditions. Australian banks are well capitalised and positioned to continue lending during a material downturn, while risks from non-bank financial institutions remain contained. The RBA said the main threats include high sovereign debt, elevated asset prices, growing leverage, geopolitical tensions, artificial-intelligence-related risks and disruptions to critical service providers. It also warned that AI investment is supporting asset prices and could improve productivity and resilience, but is complicating the cyber threat landscape and making some long-term debt financing less transparent and more vulnerable. Financial institutions should maintain robust contingency plans, crisis-response capabilities and sustained investment to withstand financial, geopolitical and operational shocks, including cyberattacks that could disrupt payments.