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Ministry of Finance and Economic Affairs

Minutes of the Meeting of the Financial Stability Council of 30 September 2016

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

Others attending: Guðrún Þorleifsdóttir, Director General of the Department of Economic Affairs and Financial Services at the Ministry of Finance and Economic Affairs; Harpa Jónsdóttir, Assistant Director of Financial Stability at the Central Bank; Bryndís Ásbjarnardóttir, Head of Macroprudential Supervision at the Financial Supervisory Authority; and Tinna Finnbogadóttir, secretary of the Financial Stability Council.

The meeting commenced at 1:35 pm.

1. Report from the Systemic Risk Board

There was discussion of the financial market situation and stress tests which the Central Bank has carried out on financial system resilience. The government's statement of 9 September this year, regarding the previous statement of 6 October 2008 on a guarantee for deposits, was discussed. In this connection the Systemic Risk Board emphasised the need to expedite the transposition of EU Directives on bank recovery and resolution and deposit guarantee schemes.

2. Quarterly discussion of the counter-cyclical buffer

Having regard to the Systemic Risk Board's analysis, the Financial Stability Council approved the Board's proposal to increase the counter-cyclical buffer by 0.25%. The buffer will then be 1.25% for all financial undertakings, both individually and on a consolidated basis, with the exception of those exempt from the buffer pursuant to the fourth paragraph of Art. 84 d of Act No. 161/2002, on Financial Undertakings. It will enter into force 12 months following FME's decision.

3. Other matters

The status of bills concerning financial stability in the Althingi was discussed, in particular bills amending the Act on Interest and Indexation, the Act on the Central Bank of Iceland and the Consumer Credit Act (Parliamentary Document no. 520 – Item 384), as well as the bill amending the Act on Mandatory Guarantee of Pension Rights and Operation of Pension Funds, No. 129/1997, as subsequently amended (Parliamentary document 1054 – Item 631).

The news announcement was approved with amendments.

Meeting adjourned at 2:10 pm.

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