Record Government Deposits @ $69 Billion – RBA Balance Sheet Week Ending 27/5/2020

Observations this week are as follows:

The balance sheet size rose by $6.9b to $272b, but slightly lower than its peak of $280.8b on 8 April 2020.


  1. Another $500b of new notes were issued taking the increase this fiscal year to $7.85b, surpassing the $4.5b  & $2b in the previous 2 years.
  2. Exchange Settlement balances fell by $19b due to the record issuance of the new ACGB 21/12/2030.
  3. Government deposits rose by a higher $23.5b to a record $69b.
  4. Other liabilities rose by $1.5b to $24.5b which is $1.0b above its short term average. The FED USD Swap facility has been repaid.


  1. The apportionment of the net increase in assets between FX and domestic assets was a lower 17% & 83% than the current allocation ratio of 25.6% & 73.8%. This highlights the continuing strong support for domestic funding versus lending AUD to the FX Fwds or purchasing net foreign exchange assets.
  2. The $6.0b increase in domestic assets created a record $201b, which is $103b higher than at the start of the fiscal year. These funds reside with the commercial banks and are contributing to a clear downward pressure on interest rates via what may be an industry wide and rarely witnessed, new funding phenomenon – “positive funding gap”. It seems ADIs are finding it a challenge to counter-balance from the normal circumstance of writing a greater volume of assets than having available funding which is their normal operational “negative funding gap”. Higher personal savings rates are accelerating the pace of amortisation which is contributing to a quicker reduction in ADI asset size which is a secondary challenge – a new norm occurring from both low interest rates and low consumer and business confidence.