25 July 2012 6:46am

The vulnerability of Australia's banks to some form of "global panic" has diminished over recent years and financial markets are not "signalling serious concerns about Australia's solvency or sustainability", Glenn Stevens, governor of the Reserve Bank of Australia said yesterday.

Stevens used his speech to survey – and rebut – a number of the mawkish arguments advanced to portray the financial risks facing Australian households and businesses.

The RBA governor centred his survey on the perennial debate over whether or not housing prices are overvalued.

After reviewing...