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Ministry of Finance and Economic Affairs

Third meeting of the Financial Stability Council in 2018

The Financial Stability Council held its third meeting of the year 2018 on Tuesday 26th of June.

The meeting discussed that risk in the financial system was still moderate and that the output gap has started to contract. At the same time, there are indications that risk in the financial system is increasing and the financial cycle upswing is firming. Nominal private debt has grown for six consecutive quarters. There is risk associated with the recent sharp increase in prices of both private and commercial properties. The increase in private real estate prices Is partly due to the rapid growth of tourism in recent years – growth that has started slowing down. The trade balance has declined rapidly while households and business have maintained their financial strength. The banks’ capital ratios have declined, in part due to dividend payments, but they are still above their capital requirements. Their resilience is therefore still considerable.

The Council approved a recommendation to the Financial supervisory authority to maintain the systemic risk buffer unchanged.

The meeting discussed a proposal that the Housing Financing Fund no longer be considered a systemically important supervised entity due to the limited risk the fund poses to the financial system as a whole and considering the change in the fund’s role and reduced activity. The Council approved the proposal.


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