Contingency planning for Euro-related contracts: Australia

Direct Australian exposure to the more volatile Eurozone member countries is small, both in terms of funding by Australian financial institutions and Australian trading relationships with those countries. However, total Australian exposure to Eurozone and the indirect effect of the crisis means that Australia is not immune. Funding costs are on the rise, as the effect of volatility is felt in the international capital markets; capital and bank liquidity is being withdrawn from Australia as European investors and banks retreat to their home markets and Australia's economy remains buoyant through the export of commodities to China and other growing Asian economies, growth which is directly influenced by any reduction in demand from Eurozone countries.