The second meeting of the Financial Stability Council in 2017 was held on Tuesday 20 June at the Ministry of Finance and Economic Affairs.
On the whole, risks in the financial system are relatively limited. Since the last meeting of the Financial Stability Council, however, risk has grown in several areas, as expected. Overall, households' and businesses' resilience has continued to increase as the economy strengthens. The commercial banks are also highly resilient in terms of asset quality, capital, and liquidity. There are signs that credit growth is on the picking up, although it is still considered modest. The banks have increasingly obtained funding in foreign markets, and borrowing terms are improving. The external position of the economy has turned positive, and there is still a sizeable trade surplus in spite of the marked appreciation of the króna. On the other hand, there are growing demand pressures in the housing and labour markets.
Developments in cyclical systemic risk have been broadly as was expected at the last meeting of the Financial Stability Council. With reference to the analysis conducted by the Systemic Risk Committee, the Financial Stability Council recommends to the Financial Supervisory Authority that the countercyclical capital buffer be held unchanged at 1.25%; cf. the Council's recommendation of 30 September 2016. The Financial Stability Council can therefore be expected to recommend that the build-up of the countercyclical capital buffer continue in line with the accumulation of imbalances in the financial system.
The Financial Stability Council's next meeting will be held on 6 October 2017.