The Reserve Bank of Australia says Australia is in a "relatively strong condition" despite an increasingly uncertain outlook for the global financial system.
In its latest financial stability review, the RBA pointed to fears over sovereign debt sustainability in Europe and "severe market reactions" in the past six months.
The ABC reports the paper says the debt crisis and reduced growth prospects in the United States and Europe have "helped trigger a period of heightened turbulence", which has raised risk aversion in funding markets.
The RBA also pointed to the possibility of severe market dislocations that could lead to another credit freeze.
''It is difficult to tell at this stage whether this will be another temporary bout of market uncertainty ... or the beginning of a more serious market dislocation,'' the RBA said.
The current strains are not on the same scale as in 2008 and 2009, when the collapse of Lehman Brothers triggered the global financial crisis.
The RBA says the impact on Australian banks has been "modest" despite falls in bank share prices and a recent tightening in wholesale funding.
"The Australian banking system is considerably better placed to cope with periods of market strain than it was before the crisis, having substantially strengthened its liquidity, funding and capital positions in recent years," the report said.
The review noted that bank profitability had returned to near pre-crisis levels, with the top four banks reporting combined half-year profits of $A12.4 billion.
But the ABC reports the RBA warned banks to adapt to a new and more cautious attitude from households and businesses.
