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Tue, Mar 22, '16 by Real Estate Investar
Glenn Stevens is a bit worried about foreign banks lending aggressively in Australia.
Of course, worrying is a big part of a central banker's job.
Sometimes in the world of business and investment, optimism is fashionable.
At other times - like now - the in thing is to see danger at every step, Mr Stevens said in a speech on Tuesday.
"It hasn't always been so - I recall lengthy periods when the mindset was always to see inflation pressures around every corner," he said.
"That people seem to find it easier to imagine the downside today is a mark of the length of the shadow cast by the financial crisis, seven years on."
But, unlike the general public, people like Glenn Stevens don't have the luxury of choosing when to worry.
The last thing anyone wants is for the Reserve Bank governor to be complacent.
"For financial regulators and policymakers, it is, of course, our duty to look out for possible problems," he said.
And he can certainly spot a few risks from his eyrie at the top end of Sydney's Martin Place.
One is the activities of foreign banks at the moment.
They are expanding aggressively, Mr Stevens said in his address to the Australian Securities and Investments Commission (ASIC) annual forum.
He was repeating a warning in the RBA's February monetary policy statement, which identified Japanese and Chinese institutions as the key drivers of business credit growth.
The expansion might not be such a bad thing.
"If these are taking opportunities left on the table where local players (or earlier foreign players) were simply too conservative, all well and good," he said.
"But one is duty-bound to observe that there is a history of foreign players expanding aggressively in the upswing only to have to retreat quickly when more difficult times come."
That cycle played out in the 1980s and had a key role in the severity of the early 1990s recession.
And it's worth remembering, Mr Stevens said.
But it's not the only pressure point the economy faces.
Another is the housing market, where tighter lending standards imposed by both Australian Prudential Regulation Authority (APRA ) and ASIC have helped temper investor enthusiasm over the past year.
And they have been imposed just in time.
"These measures have occurred ahead, so far as one can tell, of the point in the cycle when measures of asset quality start to deteriorate," he said.
The moderation in housing prices has not been the direct objective of the policy changes, but has still been helpful, he said.
Not that Glenn Stevens is about to stop worrying.
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