Australian Banks derivative exposure

Australian Banks derivative exposure

From the previous web page and Wm's economics book you can see that the largest risk to the Australian economy is Australian Banks derivative exposure.

Here is a brief summary of the exposure of Australian Banks to Derivatives at the end of March for each year from 1990 to now in AU$ Trillion. 

Please note this is their exposure, not their turnover. 

The Year on Year (YoY) increase is expressed as a percentage.

In 1990 the Australian Banks exposure to derivatives was AU$1.7T a very large figure. Their exposure has gone up regularly and massively since.  On 31 March 2020 the exposure was AU$53 Trillion which is almost double the annual output of the world's largest economy, the USA whose gdp in 2020 is estimated at AU$29T.

As mentioned previously, if banks were required to have their derivative exposure in their balance sheets it would dwarf everything else and everyone would be aware of the problem. The regulators have allowed the banks to remove their exposure from their balance sheets. The source is the Reserve Bank of Australia and the details for the source are at the bottom of this page.

Year               Trillion YoY 

Increase

1990               $1.7 T

1991               $1.8 T             9% 

1992               $1.9 T             7%

1993               $2.2 T             13%

1994               $2.4 T             8%

1995               $2.5 T             4%

1996               $2.5 T             1%

1997               $2.9 T             17%

1998               $3.1 T             7%

1999               $3.3 T             6%

2000               $4.0 T         20%

2001               $5.1 T             28% 

2002               $5.2 T             2%

2003               $5.4 T              4%

2004               $7.1 T             33%

2005               $7.8 T             11%

2006               $10.4 T           32%

2007               $12.0 T           16% 

2008               $13.7 T           14%

2009               $13.7 T           0%

2010               $14.0 T           2%

2011               $16.9 T            21%

2012               $17.5 T           4%

2013               $21.5 T            23%

2014               $24.4 T           13% 

2015               $32.3 T           33%

2016               $32.0 T           -1%

2017               $35.0 T           9%

2018               $40.6 T           16%

2019               $44.6 T           10%

2020               $53.3 T           19%

2021 $43.3 T -19%

2022 $47.1 T 9%

2023 $43.2 T -8%

2024 $42.2 T -2%

2025 $50.7 T 20%

What could possibly go wrong?

8 February 2019

Finding Australian Banks Off Balance sheet exposure on RBA website

The Reserve Bank of Australia (RBA) has once again changed the path to get to this table on its website.  To find it:

• On the RBA home page select Statistics (located under the Search box)

• Select Economic and Financial Statistics on the left hand side menu

• Select Statistical tables 

• Locate Table B2 Banks Off Balance Sheet Business and open the Excel Spreadsheet

or follow this link: https://www.rba.gov.au/statistics/tables/ 

Please note how the Reserve Bank has confused the headings in the spread sheet by placing the spread sheet title in each title and description at the top of each column. I rang and asked whether it can be removed however I was told it won't be changed.

The next sub page on this web site is Buying books and ebooks  which is a brief collection of items and observations since the book was written.