The Central Bank of Iceland’s Financial Stability Committee (FSN) published its latest financial stability statement, judging the financial system to be resilient and deciding to keep the countercyclical capital buffer unchanged at 2.5%. Systemically important banks were assessed as having strong capital and liquidity positions with ready access to market-based funding. The FSN flagged heightened uncertainty from geopolitical developments and risks from protectionism disrupting supply chains, raising trade and manufacturing costs, and potentially triggering an abrupt adverse shift in global financial markets that could spill over to Iceland. While inflation and high interest rates have weighed on households and businesses, overall balance sheets were described as strong, with low debt ratios in historical and international context, limited arrears, and a high household saving rate. Operational risk to financial market infrastructure was highlighted as an ongoing challenge, with emphasis on robust contingency and business continuity planning and on strengthening the operational security of payment intermediation, including the launch of an independent domestic payment solution and the parallel development of additional payment channels to enhance resilience.
Central Bank of Iceland 2025-03-26
Central Bank of Iceland Financial Stability Committee keeps countercyclical capital buffer at 2.5% and highlights payment system operational risks
The Central Bank of Iceland's Financial Stability Committee maintained the countercyclical capital buffer at 2.5%, citing the financial system's resilience and strong capital and liquidity positions of systemically important banks. The committee noted risks from geopolitical tensions and protectionism, while emphasizing the need for robust contingency planning and operational security in financial market infrastructure.