The Central Bank of Iceland published an address by Supervisory Board Chair Bolli Héðinsson delivered at the Bank’s 65th annual meeting, setting out governance context and highlighting balance sheet and capital position issues alongside the release of the Central Bank’s 2025 Annual Report. The speech notes that the Bank’s total assets exceeded ISK 1 trillion, driven mainly by foreign-denominated claims on non-residents held in Iceland’s international reserves, and therefore fluctuate materially with exchange rate movements. It also outlines how high interest rates and a strong króna can erode the Bank’s capital through a positive interest rate differential versus abroad and exchange rate appreciation, with the Supervisory Board stating that capital should be stronger and preferably doubled in line with the capital adequacy target it has ratified. The Chair also referenced comparable loss dynamics at other central banks, including the European Central Bank’s quantitative easing bond holdings, and pointed to ongoing efforts internationally to strengthen performance to protect capital positions.
Central Bank of Iceland 2026-04-09
Central Bank of Iceland Supervisory Board chair flags need to double the Bank’s capital as 2025 annual report shows assets above ISK 1 trillion
The Central Bank of Iceland published an address by Supervisory Board Chair Bolli Héðinsson at its 65th annual meeting, alongside the 2025 Annual Report, highlighting governance context and balance sheet and capital position issues. Héðinsson noted that total assets now exceed ISK 1 trillion, largely due to foreign-denominated reserves sensitive to exchange rate movements, and warned that high interest rates and a strong króna can erode capital, which the Supervisory Board believes should be stronger and preferably doubled in line with its capital adequacy target.