Australia’s financial system remains resilient, the Reserve Bank of Australia (RBA) said in its October 2026 Financial Stability Review, but global and operational vulnerabilities are increasing. Most households and businesses with loans are positioned to manage softer economic growth and lower housing prices, supported by positive home equity and household savings buffers. Australian banks are well capitalised and able to continue lending during a material downturn, while risks from Australian non-banks remain contained. The main threats increasingly originate overseas, including high sovereign debt, elevated asset prices, growing leverage and geopolitical tensions. Artificial intelligence (AI) is supporting asset prices and could improve productivity and resilience, but it is also complicating the cyber threat landscape and contributing to less transparent, more vulnerable long-term debt financing. The RBA said financial institutions need robust contingency plans, crisis-response capabilities and sustained investment to withstand financial, geopolitical and operational shocks, including cyberattacks that could disrupt critical payment infrastructure.