AUGUSTA, Australia — Australian banks are facing a cash crisis that will force them to write down or restructure some of their holdings, as the global financial system is in crisis.
In a report published Monday by Credit Suisse Group AG, the bank said that the global economy is expected to contract for a second straight year this year, and the outlook is likely to be even more dire in 2018.
The global economy has shrunk by more than 2 percent in the past year.
In Australia, there are signs of a cash squeeze as investors hold cash to protect themselves from a possible global economic downturn.
Australian Reserve Bank governor Michael van der Graaf said last month that he expects a cash shortfall of $3.2 trillion this year.
The Australian Financial Action Plan is designed to provide a cushion for businesses and households in times of financial stress, and provides financial assistance to businesses and families when they are unable to meet the cost of investment.
While the government has announced measures to help businesses and individuals cope with a cash shortage, many businesses are worried that the policy may be too little, too late.
In the last month, the government announced an emergency lending program for small businesses, while the Reserve Bank of Australia (RBA) is working to provide assistance to struggling retail banks.
The latest developments come at a time when some investors are holding back on their cash investments because they believe the Federal Reserve is not providing enough stimulus.RBA governor Michael Van der Graaff said in a speech last month: ‘While the Federal Government has done a good job in responding to the financial crisis, the pace of recovery is slow and uncertain, and there is considerable uncertainty over the long-term trajectory of monetary policy.’
We must take stock of the risks that remain and how much the economy and the financial system can withstand.’
He added: ‘We will continue to work to support businesses, especially those with high debt burdens and those facing high levels of debt, as they deal with the challenges that will arise from the global economic and financial disruptions.’
Australian Treasurer Scott Morrison has said that he is concerned about the global implications of the global downturn.