The IMF Country Reports Series covers economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with officials of the country, is published at the option of the member.
This paper presents an update on Iceland's Financial System Stability Assessment. Liquidity ratios, while high, now depend more than before on access to central banks' liquidity facilities because of the turmoil in global markets, and any reduction in such access would require changes in the banks' liquidity management strategy. Capital levels, although above minimum levels, are below the average of the five years and may not provide adequate buffers, in light of the deterioration in the global environment and market uncertainties about the strength of banks.