While the Australian branch of Credit Suisse holds $4.6 billion of deposits, it is understood banking regulator, the Australian Prudential Regulation Authority, has intensified its scrutiny of the banking system in the past two weeks and is satisfied that it will be able to handle shocks from developments offshore.

Conditions on international financial markets have been volatile since regional US institutions Silicon Valley Bank and Signature Bank failed. Another bank, First Republic, received a cash injection from a consortium of US banks and Credit Suisse was purchased by UBS after becoming distressed.

Though actions taken by central banks, regulators and institutions offshore appear to have allayed concerns about the global financial system for now, sentiment remains fragile and authorities are alert to the risk of a destabilising loss of confidence that could hit the sector.

Treasurer Jim Chalmers said measures taken by international financial authorities were reassuring markets and voiced confidence in the strength of the local banking system.

"While we've seen some strains in global funding markets, our domestic funding markets continue to function well," Dr Chalmers said.

"We're not immune from volatility in global financial markets but Australians should be reassured that our banks are well-regulated, well capitalised and highly liquid and are in a better position than most to deal with these disruptions."

It is understood that APRA and other Council of Financial Regulators agencies are closely monitoring the situation and, while the situation remains fluid, domestic market conditions have improved.

APRA is believed to be in frequent contact with banks, including smaller institutions, and is using real-time data and monitoring liquidity movements for any warning signs, as well as running additional tests on potential areas of risk.

Australia's banks are required to satisfy capital and liquidity standards that are considered to be among the most robust in the international financial system.

The ructions in financial markets have complicated the task facing central banks trying to bring down inflation.

The US Federal Reserve has indicated that funding costs are likely to be elevated as a result of the developments, contributing to the tightening from higher interest rates.