Net capital inflows have been a consistent feature of Australia's balance of payments. The composition of both the inflows, as well as the outflows when Australians invest offshore, has varied substantially over time. That's the view from Guy Debelle, Deputy Governor of the Reserve Bank of Australia, speaking at the Australian Financial Review Banking and Wealth Summit"By and large these trends have, on the surface, continued the patterns of previous years, but disaggregating a little further reveals some noteworthy trends," Medcraft saif . Firstly, sizeable capital inflows have continued to fund mining investment, in particular large LNG projects. Whereas these (notional) flows during the mining investment boom mostly reflected reinvested earnings, much of the more recent flows have been (actual) transfers from offshore affiliates. As these LNG projects transition into the production and export phase, we would expect to see these inflows moderate. Moreover, some of these profits are likely to be paid out to offshore owners as dividends rather than reinvested. Secondly, there has been continued appetite from foreign investors for Australian government debt, but this needs to be measured carefully given the increased participation of foreign investors in the domestic repo market. The third development has been the continuation of little net capital flows either to or from the banking sector, but, within that, a notable change in the composition of the investor base, particularly for short-term debt.The aggregate pattern of capital flows to the banking sector has not changed materially since 2014 - and indeed over the period since the financial crisis. Following the shift away from offshore wholesale debt towards domestic deposits that took place in the wake of the global financial crisis, the funding composition of banks has remained relatively stable. But notwithstanding this stability, recently there have been two noteworthy developments relating to short-term debt, both stemming from regulatory reforms: over the past year or so, Australian banks have reduced their short-term debt issuance in preparation for the introduction of the Net Stable Funding Ratio next year. The NSFR provides an incentive for banks to shift to sources of funding considered to be more stable and away from sources such as short-term wholesale liabilities. the composition of Australian banks' short-term offshore funding has also changed following the implementation of US Money Market Fund reforms by the Securities and Exchange Commission in October 2016. Although prime MMFs have maintained their exposure to Australian banks relative to banks globally (at around 8 per cent of total MMF exposures to banks), their holdings of Australian bank debt have declined from around US$100 billion to under US$30 billion currently.However, in aggregate, Australian banks have continued to raise almost as much short-term funding from US commercial paper markets, despite the decline in MMFs. They have been able to tap other investors, in particular US corporates with large cash holdings, such as those in the technology sector.Since 2013, the reduction in the net income deficit has instead reflected an increase in returns on Australian residents' offshore equity holdings. "These