Australia’s prudential regulator has asked local banks to report cryptocurrency transactions, amid contagion from the Silicon Valley Bank (SVB) bankruptcy.
The Australian Prudential Regulation Authority (APRA) has begun requiring banks to disclose their exposures to cryptocurrency-related startups and companies, according to reported on March 21 the Australian Financial Review.
The regulator has ordered banks to improve their reporting on crypto assets and provide daily updates to APRA, the note noted, citing three people familiar with the matter. The agency aims to gain more information and insights into banks’ exposure to cryptocurrencies, as well as the associated risks, according to the sources.
The new measures appear to be part of APRA’s increased supervision of the banking sector following recent massive collapses of the global banking system. On March 19, UBS Group agreed to the purchase of its struggling competitor Credit Suisse for USD 3.2 billion, after the collapse of the latter over the weekend. The purchase became one of the latest bankruptcies in the banking sector following the collapses of SVB and Silvergate.
Jonathan Mott, an analyst at Barrenjoey, told clients in a note that the situation “remains stable” for Australian banks, but warned that sentiment could turn quickly, putting pressure on bank margins.
“Our channel checks indicate that deposits are not being withdrawn from the smallest institutions of any size, and that capital and liquidity buffers are strong,” said Mott, adding:
“But this is a confidence crisis and credit spreads and the cost of capital will continue to rise. At the very least, this will add to the margin pressure banks face, while credit quality will continue to deteriorate. “.
The news comes shortly after the Australian Banking Association launched an investigation into the cost of living to study the impact of the COVID-19 pandemic and geopolitical tensions on Australians. The research followed an analysis of rising inflation that suggests that more than 186 US banks are at risk of a similar shutdown if depositors decide to withdraw all their funds.
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