“The Reserve Bank worked closely with the large banks and cash-in-transit companies to ensure branches had sufficient cash supplies. The elevated demand has since abated.”
The RBA said the coronavirus outbreak had put pressure on the entire financial system but it was holding up well.
“The regulatory authorities have been working closely together to minimise the economic harm caused by the pandemic, to avoid the impairment of household and business balance sheets and to support financial market functioning,” it said.
“These measures, along with the strong starting position of the banking system, increase the financial system’s ability to absorb, rather than amplify, the effects of the pandemic.”
The RBA noted the various closures aimed at stopping the spread of the coronavirus would hit the business sector, with credit quality across a range of loans likely to deteriorate.
It said businesses had gone into the pandemic with solid balance sheets and a strong ability to service debts because of falling interest rates.
“However, the adverse shock to business conditions is already large and expected to grow substantially,” it said.
“Fiscal and banking support will help businesses, but many will struggle. Revenues for many firms servicing the household sector – including those in the retail trade, food and accommodation services, and tourism industries – have dried up.
“Some firms have already closed, at least temporarily. Many have stood down workers.”
Separate figures from the Australian Financial Security Authority, released on Thursday, show a lift in the number of personal insolvencies over the past week. In the week to the end of April 5, the authority recorded 1019 personal insolvency claims. This is 21 per cent higher than the weekly average.
Sign up to our Coronavirus Update newsletter
Get our Coronavirus Update newsletter for the day’s crucial developments at a glance, the numbers you need to know and what our readers are saying. Sign up to The Sydney Morning Herald’s newsletter here and The Age’s here.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.