The Central Bank of Iceland has published the minutes of its Financial Stability Committee (FSN) meeting of 22 and 23 September 2025, confirming a decision to keep the countercyclical capital buffer (CCyB) unchanged at 2.5%, the top of the 2.0% to 2.5% range the FSN defines as the neutral buffer rate. The minutes set out discussions on key risks to Icelandic financial stability and global developments, covering domestic financial markets, private sector indebtedness, the real estate market, and financial institutions’ resilience including capital and liquidity positions. The FSN reviewed the Bank’s latest stress test of systemically important banks, based on assumptions comparable to those used by the European Banking Authority, and discussed the Bank’s financial stability policy formulation. Briefings also covered Iceland’s fiscal debt position and international bond market developments, the role of real estate firms and funds in individuals’ home purchases, potential impacts on commercial banks from court cases concerning variable-rate mortgage terms, an updated assessment of which credit institutions are systemically important, and cyber and operational security factors. The FSN also noted elevated geopolitical uncertainty and concerns about fiscal sustainability in many advanced economies, and underscored the importance of maintaining financial institutions’ resilience and sizeable international reserves.
Central Bank of Iceland 2025-10-29
Central Bank of Iceland publishes Financial Stability Committee minutes and keeps countercyclical capital buffer at 2.5%
The Central Bank of Iceland's Financial Stability Committee maintained the countercyclical capital buffer at 2.5% after discussing risks to financial stability, including domestic markets, private sector debt, and financial institutions’ resilience. The committee reviewed stress tests of systemically important banks and addressed issues like fiscal debt, real estate market impacts, and geopolitical uncertainties.