In the opinion of the Central Bank of Iceland, the draft composition agreements submitted by the estates of the three failed banks satisfy the requirements set forth in the Foreign Exchange Act, in that the implementation of the composition agreements together with the proposed mitigating measures will not jeopardise monetary, exchange rate, or financial stability. This is stated in the Central Bank's report on the settlement of the failed banks' estates on the basis of the stability conditions.
The Minister of Finance and Economic Affairs received a letter from the Central Bank of Iceland dated 26 October 2015, requesting a consultation with the Minister about exemptions from the Foreign Exchange Act, no. 87/1992, for the estates of the three banks, Landsbanki Íslands, Kaupthing, and Glitnir. The exemptions in question pertain to foreign exchange transactions and capital transfers in connection with the composition agreements and final winding-up of the estates.
Any exemption that pertains to a financial institution undergoing winding-up proceedings and authorises foreign exchange transactions and cross-border movement of capital in an amount exceeding ISK 25bn per year requires prior consultation with the Minister, as does any exemption pertaining to a legal entity whose balance sheet is larger than ISK 400bn. If such an exemption could have a substantial impact on Iceland's debt position and affects the ownership of the commercial banks, it may only be granted after consultation with the Minister of Finance and Economic Affairs and after the Minister has made the Parliamentary Economic Affairs and Trade Committee aware of its economic impact.
The Minister of Finance and Economic Affairs and the Governor of the Central Bank presented the Bank's conclusions and the economic impact of granting the exemptions to the Parliamentary Economic Affairs and Trade Committee this morning. The Cabinet and the Committee on Economic Affairs have also discussed the matter.
Following the Minister's presentation to the Economic Affairs and Trade Committee, representatives of the Task Force for Capital Account Liberalisation met with party caucuses and presented a detailed analysis of the impact on the balance of payments and the state of the economy.