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On March 16, 2026, the Australian Prudential Regulation Authority (APRA) announced a consultation on a package of reforms to bank capital and liquidity settings. The reforms aim to maintain the resilience of Australia's financial system and ensure banks can absorb shocks and respond to periods of market turbulence. APRA has identified opportunities to uplift liquidity settings to align with international practice while making the capital framework more risk-sensitive. The proposed changes follow years of heightened geopolitical and market volatility. The package of reforms will be progressed through separate workstreams addressing liquidity, credit and market risk, and is designed to be broadly cost neutral across the banking industry. Small banks with more stable funding sources are expected to see cost benefits from the liquidity changes. Key proposals include: changes to the liquidity framework for the largest banks, including consideration of a new Pillar 2 liquidity framework to address risks not covered by existing Liquidity Coverage Ratio minimum requirements; a more risk-sensitive liquidity risk framework for smaller banks to incentivise robust practice; targeted amendments to the standardised capital framework to better align capital requirements with underlying risk, with focus on high-quality lending to critical infrastructure projects, corporates without credit ratings, and residential property development; and implementation of a simplified approach to the Basel Committee's Fundamental Review of the Trading Book (FRTB), which will reduce compliance costs compared with full implementation. APRA will consult on the package in stages, beginning with consultation on changes to standardised risk weights for credit risk in the first half of 2026. A detailed outline of APRA's proposed reforms and indicative consultation timetable is available on APRA's website.