The Central Bank of Iceland has kept the countercyclical capital buffer unchanged at 2.5%, assessing the financial system as sound and well prepared for unforeseen shocks. Systemically important banks remain in a strong financial position with good access to market funding, while high national savings, modest indebtedness and a relatively stable króna have limited the domestic impact of turmoil in global bond markets. Risks are rising as persistent inflation and high interest rates coincide with weakening economic activity. Household debt ratios and arrears remain low, supported by borrower-based measures, but the labor market and housing sector are cooling. Falling real house prices, more properties for sale and longer selling times, particularly for new homes, could increase pressure and arrears among construction companies. The Bank also called for financial firms to strengthen defenses against increasingly fast, complex and scalable cyberattacks enabled by artificial intelligence, and for greater coordination in preparing for serious operational incidents. The implementation of offline payment card functionality marks a further step in strengthening payment resilience.
2026-09-23Central Bank of Iceland
Central Bank of Iceland keeps countercyclical capital buffer at 2.5% as economic slowdown and cyber threats test resilience
The Central Bank of Iceland kept the countercyclical capital buffer at 2.5%, finding that strong banks and low private-sector indebtedness support financial stability. A cooling economy and housing market could increase pressure on construction companies, while AI-enabled cyberattacks require stronger defenses and coordinated incident preparedness. Offline payment card functionality has now been implemented to strengthen payment resilience.