Glenn Stevens, governor of the Reserve Bank of Australia, painted a highly positive picture of Australian banks' strength as the RBA and Australian Prudential Regulation Authority seek to minimise local damage from overseas financial turmoil.Testifying to the House of Representatives Economics Committee on Friday, Stevens said local banks had reported being offered "substantial US dollar funding" from overseas.He also suggested that local banks would now cope with any closure of international funding markets better than they could have done in 2008.Stevens repeatedly referred to the soundness of Australian banks and the lack of funding problems for Australian institutions, contrasting their situation with problems in other markets. His comments appear to reflect a genuine view in the official family that Australia is faring well, while other markets are trembling."Our banks are strong, our currency is sound and our sovereign credit position is in the international top tier," Stevens declared in his prepared statement.The governor noted that global markets "remain on edge" and said European banks were running into "renewed pressure on US dollar funding". But, he said, Australian markets had been little affected, other than tracking the global share price fall. They were travelling "fairly well in the circumstances," he said.Stevens also said, in his statement, that there had been "no abnormal demand for liquidity by financial institutions" during the markets' recent turbulence. The quantity of exchange settlement funds in the system had been "completely normal over the past month".He contrasted local banks' present healthy funding situation with their 2008 problems, and problems in other markets. Funding costs had if anything declined recently and this was being reflected in cheaper fixed-rate mortgages."Major Australian banks report being offered substantial US dollar funding in offshore markets on account of their relatively high credit standing and that is quite a contrast to three years ago," he said.And Stevens again noted that the banks' higher deposit flows and slower balance sheet growth meant that "their reliance on such wholesale funding is much reduced from three years ago".Later, in response to questions, he said local banks "could probably cope with the closure of those markets for a period of time - that has not happened, but if it did..."And he described as "trivially small" the Australian banks' exposure to troubled European periphery countries such as Greece, Portugal, Spain, Italy and Ireland. That response matches APRA figures previously reported by Banking Day.Triple T Consulting's Sean Keane noted that Stevens' confidence in Australian markets was reflected in market behaviour."The fact that the daily cash settlement rate has traded exactly at the RBA's target rate for more than 400 days consecutively is also evidence of a very stable local banking system," Keane wrote to clients on Friday afternoon. "The domestic funding markets appear to be an island of calm and there are no signs of any unusual stresses in the system."