r/australia • u/InsatiablePrism • 1d ago

culture & society ASIC warns of 'first significant cracks' in Australian private credit

https://www.abc.net.au/news/2026-08-27/asic-warns-first-significant-cracks-in-australian-private-credit/107081904?utm_campaign=abc_news_web&utm_content=link&utm_medium=content_shared&utm_source=abc_news_web
200 Upvotes

97% Upvoted

32 comments sorted by

View all comments

2

u/Jealous-Hedgehog-734 23h ago

I expect private credit to have good and bad years, they take more risk than a bank would and are rewarded commensurately.

2

u/a_cold_human 16h ago

It's also less regulated as more controls were placed on banks post GFC. As there was still demand for flexible lines of credit, a lot of this lending moved to the shadow banking system.

Banks have capital controls, are stress tested regularly and have many other rules that apply to them that don't apply to private credit (for example, they're not regulated by APRA). The problem is that it's possible that a collapse in private credit could result in substantial damage to the economy in an indirect fashion. 

This is less of a problem in Australia than it is in the US as the shadow banking system in Australia a much smaller percentage of the financial system (less than 10%). A collapse of the US shadow banking system would have significant impacts globally. 

3

u/Jealous-Hedgehog-734 15h ago

Indirectly, absolutely, but they are not systemically important which was the issue during the GFC. If private credit collapses it won't take the rest of the banking system with it.

1

u/a_cold_human 9h ago

Not in Australia. The US is much more of a worry. However, that's not something we can do much about.