The Government of Iceland has decided, following consultation with the Financial Supervisory Authority and the Central Bank of Iceland, that there is no reason for the declaration concerning the blanket Treasury guarantee of deposits to remain in effect.
The declaration that all deposits were guaranteed was made after the financial collapse in the autumn of 2008. Today, domestic deposit institutions are secure as regards capital, funding, liquidity, and balanced operations. Furthermore, since the passage of the Emergency Act in 2008, a number of broad-based changes have been made to the financial market regulatory framework, including amendments to the Act on Financial Undertakings in 2010, amendments to financial market legislation, and the establishment of the Financial Stability Council and the Systemic Risk Committee, among other things. Moreover, new rules have come into effect that entail substantially tighter requirements concerning the banks' capital and the quality of such capital.
Amendments have also been made to the Act on Deposit Guarantees and Investor Compensation Scheme so as to clarify the protection provided by the Act, with emphasis on protecting deposits held by the general public.
The authorities are continuing to strengthen the necessary safety net for the financial markets and to provide supervisory bodies and Government authorities with expanded authorisations for timely intervention when the need arises. The Ministry of Finance and Economic Affairs is currently working on the implementation of new European regulatory instruments on the resolution of financial institutions, which enable the authorities to intervene in the operations of such institutions and make it easier to protect individuals' deposits if circumstances demand it. Work is also being done to implement new European rules on deposit guarantees, which will support the regulatory framework on resolution procedures.