Australia’s Pension Funds May Amplify Stress in Liquidity Shock

The vast scale of Australia’s rapidly expanding pension funds means they could amplify stress in the event of a severe market-wide liquidity disruption, the Reserve Bank said in a half-yearly assessment of the nation’s financial system.

Managing a large and expanding market presence and building resilience to shocks in the superannuation sector remain priorities, the RBA said in its October Financial Stability Review released Thursday. So-called super funds now account for 160% of Australia’s annual economic output.