The Financial Stability Committee of the Central Bank of Iceland has published a financial stability statement concluding that the financial system remains sound, with the three large banks able to withstand substantial shocks without excessively curtailing credit, and has left the countercyclical capital buffer unchanged at 2.5%. The statement points to strong capital and funding positions at systemically important banks and generally low private sector debt ratios and arrears, while warning that prolonged global uncertainty, a worsening inflation outlook and high interest rates could test resilience. The Committee highlighted a cooling housing market, rising debt among construction companies and early signs of higher arrears in that sector, and said lenders must take account of the elevated risk. It also said operational risk in financial market infrastructure has increased because of technological change, developments in artificial intelligence and heightened global unrest, and it classified the Central Bank’s interbank payment system and Nasdaq’s securities settlement system as basic financial system infrastructure, while the Financial Market Data Centre’s deposit and payment systems and Auðkenni ehf.’s electronic authentication for financial services were classified as core financial market infrastructure. An offline payment card solution is due to be implemented in mid-2026, and the Committee called for broader payment options and infrastructure for new solutions, including account-to-account transfers, to strengthen continuity in severe operational incidents. It said it will continue to use the policy instruments at its disposal to preserve financial stability.
Central Bank of Iceland2026-06-03
Central Bank of Iceland keeps countercyclical capital buffer at 2.5% and identifies key payment and settlement systems as systemically important
The Financial Stability Committee of the Central Bank of Iceland said the financial system remains sound and kept the countercyclical capital buffer at 2.5%, while warning that global uncertainty, inflation and high interest rates could test resilience. It highlighted rising risks in the construction sector, increased operational risk in financial market infrastructure, and newly classified key payment and settlement systems as basic or core infrastructure. The Committee noted plans for an offline payment card solution in mid-2026 and called for broader payment options to support continuity in severe incidents.