The Central Bank of Iceland’s Financial Stability Committee published a financial stability statement that judged the financial system resilient while highlighting heightened external uncertainty and operational risks. As part of its quarterly review, it decided to keep the countercyclical capital buffer (CCyB) unchanged at 2.5%. Systemically important banks were assessed as having strong capital and liquidity and ready access to market-based funding, while persistent inflation and high interest rates were noted as creating challenges for households and businesses despite limited arrears and generally strong private sector balance sheets. The Committee reported moderate credit growth, debt ratios that are low by historical and international standards, and a cooled housing market where price increases have tapered off even as construction activity remains strong. It also flagged ongoing operational risk in financial market infrastructure, calling for continuous monitoring of systemically important infrastructure, robust emergency planning, and continued work to bolster payment intermediation resilience, including establishing an independent domestic retail payment intermediation solution and an offline payment card solution.
Central Bank of Iceland 2025-06-04
Central Bank of Iceland holds countercyclical capital buffer at 2.5% and presses for stronger payment infrastructure resilience
The Central Bank of Iceland's Financial Stability Committee maintained the countercyclical capital buffer at 2.5%, citing a resilient financial system amid external uncertainties and operational risks. The Committee noted strong capital and liquidity in systemically important banks, moderate credit growth, and a cooled housing market, while emphasizing the need for robust emergency planning and enhanced payment intermediation resilience.