Measures by Australian regulators to mitigate "the probability and reduce the negative consequences of a potential downturn in housing" feature as one of the reasons for Moody's Investors Service's confirmation of Australia's Aaa sovereign issuer rating, announced yesterday. The Aaa rating is relevant to underpinning the ratings of Australia's banks, with the major banks rated Aa2, having been cut from Aa1 five years ago."Australia's monetary policy and banking regulation and supervision are vigilant and responsive to economic and financial conditions," Moody's said."On banking regulation and supervision, the Australian Prudential Regulation Authority has implemented measures that should diminish the probability and reduce the negative consequences of a potential downturn in housing," it said."These include imposing moderate loan-to-value ratios on average and limiting growth in investors-led demand for mortgages, although low interest rates could dampen the effectiveness of these measures somewhat."In a counterpoint to cynicism about Australia's economic prospects, Moody's said that "longer term, Australia's potential growth is higher than most Aaa-rated sovereigns. In particular population growth is stronger, ageing is slower and financial provisions for an ageing population are more advanced than in many advanced economies."