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Ministry of Finance and Economic Affairs

Minutes of the Meeting of the Financial Stability Council of 19 January 2015

Minutes of the Meeting of the Financial Stability Council, 19 January 2015.

The meeting was held in the Ministry of Finance and Economic Affairs.

Members of the Council: Minister of Finance and Economic Affairs Bjarni Benediktsson, Chairman; Már Guðmundsson, Governor of the Central Bank; and Unnur Gunnarsdóttir, Director General of the Financial Supervisory Authority

Others attending: Anna Borgþórsdóttir Olsen, Acting Director General of the Department of Economic Affairs and Financial Services at the Ministry of Finance and Economic Affairs; Sigríður Benediktsdóttir, Director of Financial Stability at the Central Bank; Jón Þór Sturluson, Deputy Director General of the Financial Supervisory Authority; and Tinna Finnbogadóttir, secretary of the Financial Stability Council.

Meeting called to order at 3:20 pm.

1. Mandate of the Financial Stability Council

The mandate of the Financial Stability Council and its communications with the Systemic Risk Board, the Central Bank of Iceland and the Financial Supervisory Authority were discussed. It had been anticipated that the Council would meet at least three times each year, and more often if this were deemed necessary. It was decided that the Council would meet four times each year, as an EU Directive which is to be transposed into Icelandic law provides for the determination of a counter-cyclical buffer, which is a macroprudential tool available to the Council, four times each year.

2. Report from the Systemic Risk Board

The Central Bank Governor presented the main points of the Report of the Systemic Risk Board to the Financial Stability Council. Discussion.

3. Systemically important financial undertakings

The methodology used by the European Banking Authority (EBA) in assessing systemically important financial undertakings was presented, followed by discussion of how assessment of these undertakings is carried out in neighbouring countries.

4. Prudential rules following capital controls

Discussion on rules considered important to adopt prior to relaxation of capital controls as presented in 2012 in the publication "Prudential Rules Following Capital Controls". A review was made of rules which have been adopted and those which are under preparation by institutions.

5. Draft report of the committee on shadow banking activities

Principal conclusions of the committee on shadow banking activities were discussed. It is established that European acts will be transposed into Icelandic law, which will set increased requirements for the recording and disclosure of information on transactions which, up until now, have been excluded from traditional supervision.

6. Other matters

a. Inflation-indexed loans

Discussion of the conclusion of the expert group on inflation-indexed loans and how this is to be followed up on.

b. Expected District Court judgement on inflation-indexed loans

Discussion of the possible effects of the judgement.

c. Transposition of financial market legislation, with regard to regulations on European supervisory agencies

The Chairman presented the Ministry's work on transposition of financial market legislation and how this is progressing.

d. News announcement

Approved with amendments

Meeting adjourned at 5:15 pm.

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