Reserve Bank of Australia  deputy governor Ric Battelino has attacked claims that Australian banks' offshore borrowing is creating a serious economic vulnerability.The concern has been raised by several players and commentators this year, including National Australia Bank CEO Cameron Clyne and former Westpac CEO Robert Joss. Their chief concern is that foreign funding leaves the economy vulnerable to sudden changes in foreign investor sentiment - that, in Battelino's words, "the flow of offshore money suddenly stops".But, Battelino told a Sydney conference yesterday, the focus on this risk arose from a "pre-1970s view". It was less relevant for modern economies with well-developed financial markets and floating exchange rates.Answering a question after his speech, he expanded on this point: "The risks that people point to in offshore borrowings are often overstated, because people don't really understand how the Australian banks are managing those risks."The crucial point is that those offshore borrowings are all hedged back to Australian dollars, and they're used to fund Australian dollar investments. That makes the banks very prudent."In his speech, the deputy governor noted that offshore borrowing had not left Australian banks particularly vulnerable during the global financial crisis. And consumers' increased bank savings and Government's higher borrowings had helped to fund the current account deficit.And, he argued, as credit growth picked up in the coming years, "it is likely that banks will be able to maintain the more conservative funding pattern they have put in place recently."