RBA Financial Stability Review: Slowdown in China could trigger global economic downturn

The Reserve Bank of Australia's Financial Stability Review released a few minutes before press time, revealed growing concerns about a slowdown in China and its repercussions on the global economy. 

Key quotes (Source: Reuters)

• Risk global financial volatility could rise for a number of reasons.
• Trade tensions, a slowdown in China could trigger a global economic downturn.
• The Australian economy is improving but the housing market has slowed.
• Sentiment toward housing market has become more cautious, outlook subdued.
• Drop in home prices to date has been small relative to previous gains, rapid or large fall in home prices could disrupt financial system, household finances.
• The level of household debt is high but does not appear to be a large risk to the financial system.
• Debt levels could be a risk if they cause households to cut back on consumption.
• Possible, but not likely, excessive tightening in lending standards could fuel housing slowdown.
• The resilience of the financial system overall has improved, capital ratios are strong.
• Banks' returns on equity have declined but still high by international standard.