Narrow Your Choices

Refine By Topic

Refine By Series

Refine By Language

Refine By Date

—

Refine By IMF Taxonomy

Refine By JEL Taxonomy

Refine by LOC Taxonomy

Refine By THEMA Taxonomy

  • Print
  • Save

Europe > Iceland

You are looking at 1 - 10 of 22 items for :

  • Type: Journal Issue x
  • Financial Institutions and Services: Government Policy and Regulation x
Clear All Modify Search
Cover IMF Staff Country Reports
Iceland: Financial Sector Assessment Program-Technical Note on Stress Testing and Systemic Risk Analysis
International Monetary Fund. Monetary and Capital Markets Department
This technical note on Iceland focuses on Stress Testing and Systemic Risk Analysis. The Financial Sector Assessment Program took place against the background of a strengthened financial sector in Iceland amid heightened uncertainty in the global economy. The Icelandic financial landscape has undergone significant structural transformation since the global financial crisis with a contracted banking sector. The banking sector is sound, but foreign exchange (FX) funding remains a vulnerability. The scenario-based bank solvency stress test confirmed the sector’s resilience to severe but plausible macro-financial shocks, with gross domestic product influence similar to the Global Financial Crisis. The adverse scenario confirms banks’ resilience to severe yet plausible adverse shocks. Although the adverse scenario produced a significant impact on bank capital ratios, no bank saw its capital ratios falling below the hurdle rates, owing to the high initial capital positions and adequate pre-provision income. The Liquidity Coverage Ratio-based stress test suggests that although the banking system on aggregate is broadly resilient to adverse liquidity conditions, it is not immune to additional liquidity outflows from pension and nonresident FX funding.
Keywords:
fair value; Bank-NBFI network; bank asset composition; bank liquidity position; Tier 1; top-down solvency stress test; stress test; interest rate projection; sensitivity analysis; Pension spending; Stress testing; Commercial banks; Liquidity; Global; Europe
Cover IMF Staff Country Reports
Iceland: Financial Sector Assessment Program-Technical Note on Detailed Assessment on Basel Core Principles for Effective Banking Supervision
International Monetary Fund. Monetary and Capital Markets Department
This paper for Iceland presents Detailed Assessment on Basel Core Principles (BCP) for Effective Banking Supervision. The Ministry of Finance and Economic Affairs/parliamentary budgetary processes that is a legacy funding structure from the prior Fjármálaeftirlit hamper Central Bank of Iceland’s (CBI) ability to access funding for banking regulation and supervision. Key legislative amendments have been enacted in the banking laws to ensure Iceland’s compliance with the European Union’s regulatory framework for banking supervision. CBI implements a conservative approach to both capital and liquidity requirements, resulting in highly capitalized and adequate liquidity levels for banks. CBI/ Financial Supervisory Authority’s current complement of banking supervisors, including risk specialists is strong, however a few risk areas need augmentation. CBI’s banking supervisory and regulatory framework pertaining to Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) requirements is considered adequate. CBI has made great efforts to build up the area of expertise in AML/CFT to implement a risk based supervisory assessment model for banks and has carried out deep on-site inspections to assure itself of the effectiveness of bank’s risk management practices regarding compliance with applicable AML/CFT legislative and supervisory requirements.
Keywords:
ASSESSMENT methodology; adequacy ASSESSMENT program; risk management; banking authority; Basel committee; Financial stability assessment; Credit risk; Market risk; Operational risk; Bank supervision; Global; Baltics
Cover IMF Staff Country Reports
Iceland: Financial Sector Assessment Program-Technical Note on Macroprudential Policy
International Monetary Fund. Monetary and Capital Markets Department
This technical note highlights macroprudential policy in Iceland. Macroprudential policy in Iceland recently has centered on the property market, given the importance of this market for households’ balance sheets, banks’ loan portfolios, and the potential systemic risks. The Central Bank of Iceland (CBI) has a strong institutional framework for macroprudential policy, assuring the willingness to act. The macroprudential framework also promotes the ability to act promptly. As the financial supervisor, the CBI has control over prudential tools; it may exercise its power as necessary to ensure financial stability. The institutional arrangements encourage effective cooperation and coordination with other institutions. CBI surveillance and systemic risk assessment rely on comprehensive quantitative information and constructive dialogue with the industry as well as on various models and stress tests. The strong analytical capacity for systemic risk monitoring can be further enhanced by filling data gaps and enriching models. While recent measures go in the right direction, the authorities should stand ready to take further actions if vulnerabilities persist.
Keywords:
capital markets department; Macroprudential decision making; housing market Mispricing; house price misalignment; CBI share; Financial sector stability; Macroprudential policy; Systemic risk; Loans; Mortgages; Global; Baltics
Cover IMF Staff Country Reports
Iceland: Financial Sector Assessment Program-Technical Note on Financial Safety Net Crisis Management
International Monetary Fund. Monetary and Capital Markets Department
This technical note focuses on financial safety net crisis management in Iceland. This paper assesses and makes recommendations regarding the different elements of the financial safety net in Iceland. The scope of the assessment includes the institutional arrangements for recovery, resolution, and crisis management; the oversight of banks’ recovery plans; the legal regime for bank bankruptcy and resolution; resolution planning by the authorities; the funding mechanism to support resolution; the deposit guarantee scheme; and the government authorities’ collective preparedness to deal with financial crises. The current institutional framework for crisis management lacks formal involvement of the Ministry of Finance. The regime for banks that are systemic adheres to the internationally agreed resolution standards. The legal regime for bankruptcy and liquidation of banks that are not systemic is sound. The Deposit Guarantee Fund should be strengthened in line with EU requirements of the Deposit Guarantee Scheme Directive. Finally, the authorities’ collective contingency planning for financial crisis (including testing of plans) should be intensified.
Keywords:
B. bank insolvency; recovery planning; financial crisis preparedness; asset portfolio; market funding; resolution plan; Bank resolution framework; Lender of last resort; Bank resolution; Financial sector stability; Baltics; Europe
Cover IMF Staff Country Reports
Iceland: Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
This paper presents Iceland’s Financial System Stability Assessment. Iceland has made solid progress since the 2008 crisis and the last Financial Sector Assessment Program update in restructuring banks and implementing important financial sector reforms. It has transposed many EU Directives and Regulations into national law, improving the regulatory, supervisory, and crisis management frameworks. Banks are resilient to solvency stress under the adverse scenario but are sensitive to interest rate changes. Liquidity stress can generally be handled but there are vulnerabilities. The value of pension funds’ assets declines substantially in the adverse scenario, reducing future pension values materially. Iceland’s robust financial system has weathered the impact of the coronavirus disease pandemic well, owing to substantially improved macro-financial frameworks since the global financial crisis.
Keywords:
coverage ratio; FSAP finding; bank Contagion analysis; E. risk analysis; bank stress tests; Pension spending; Stress testing; Financial Sector Assessment Program; Financial sector stability; Real estate prices; Global
Cover IMF Working Papers
Capital Controls in Times of Crisis – Do They Work?
Apoorv Bhargava
,
Romain Bouis
,
Annamaria Kokenyne
,
Manuel Perez-Archila
,
Umang Rawat
, and
Ms. Ratna Sahay
This paper provides an analysis of the use and effects of capital controls in 27 AEs and EMDEs which experienced at least one financial crisis between 1995 and 2017. Countries often turn to using capital controls in crisis: some ease inflow controls while others tighten controls on outflows. A key finding is that countries with pervasive controls before the start of the crisis are shielded compared to countries with more open capital accounts, which see a significant decline in capital flows during crises. In contrast, the effectiveness of capital controls introduced during crises appears to be weak and difficult to identify. There is also some evidence that the introduction of outflow controls during crises is negatively associated with sovereign debt ratings, but that investors may actually forgive with time.
Keywords:
Capital controls; capital outflows; financial crises; inflow control; outflow controls Introduced; outflow control; controls on outflow; tightening control; Capital account; Capital flows; Caribbean; Global
Cover Departmental Papers
Managing Systemic Banking Crises: New Lessons and Lessons Relearned
Ms. Marina Moretti
,
Mr. Marc C Dobler
, and
Mr. Alvaro Piris Chavarri
This paper updates the IMF’s work on general principles, strategies, and techniques from an operational perspective in preparing for and managing systemic banking crises in light of the experiences and challenges faced during and since the global financial crisis. It summarizes IMF advice concerning these areas from staff of the IMF Monetary and Capital Markets Department (MCM), drawing on Executive Board Papers, IMF staff publications, and country documents (including program documents and technical assistance reports). Unless stated otherwise, the guidance is generally applicable across the IMF membership.
Keywords:
DPPP; DP; balance sheet; financial crisis; bridge bank; insurance fund; economic activity; public funds; bank; authority; process; bank liquidity; beneficial owner; due diligence; banking system; equity capital; targeted bank diagnostic; financial activity; cash flow; home resolution authority; bank risk; cash limit; Bank resolution framework; Global financial crisis of 2008-2009; Deposit insurance; Crisis management; Global; Europe
Cover IMF Staff Country Reports
Iceland: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Iceland
International Monetary Fund. European Dept.
This paper provides an assessment of the economic conditions, outlook, and crises in Iceland. There is a mounting sense that capital controls hurt growth prospects, repressing local financial markets, scaring foreign investors, and impeding savings diversification, and that it is time for them to go. Recent settlements with the bank estates are a huge step forward, improving already favorable macroeconomic conditions. At 4 percent in 2015 and gaining pace, real GDP expansion is among the fastest growing in Europe, opening up a positive output gap. However, the biggest risk for Iceland is overheating. Large wage awards on top of already hot economic readings speak to Iceland’s boom-bust history.
Keywords:
ISCR; CR; Iceland; right; CBI governor; IMF staff projection; CBI transactions; inflation expectation; baseline projection; asset price pressure; Bank supervision; Capital account liberalization; Capital controls; Wages; Global; Europe
Cover IMF Staff Country Reports
Norway: Financial Sector Assessment Program-Technical Note-Crisis Management, Bank Resolution, and Financial Sector Safety Nets
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note reviews crisis management, bank resolution, and financial sector safety nets in Norway. Arrangements for crisis management, bank and group resolution, and the financial sector safety nets are well developed and tested in Norway. Roles, responsibilities, accountabilities, and information-sharing arrangements among the relevant bodies are generally well defined and functioning. The current legal framework provides substantial powers and flexibility to deal with failing or failed banks but needs to be strengthened in several respects. The Financial Supervisory Authority has begun to implement a recovery plan requirement for the largest banks. The authorities also make good use of simulation exercises to enhance crisis preparedness.
Keywords:
ISCR; CR; MREL requirements; articles of association; banks assets; concern resolution; guarantee funds; problem bank; solvency support; lead resolution authority; MREL requirement; size bank; FSA responsibility; FSA comment; banking group; saving bank; Bank resolution framework; Financial stability assessment; Bank resolution; Financial sector stability; Global
Cover IMF Working Papers
Resolving Residential Mortgage Distress: Time to Modify?
Mr. Jochen R. Andritzky
In housing crises, high mortgage debt can feed a vicious circle of falling housing prices and declining consumption and incomes, leading to higher mortgage defaults and deeper recessions. In such situations, resolution policies may need to be adapted to help contain negative feedback loops while minimizing overall loan losses and moral hazard. Drawing on recent experiences from Iceland, Ireland, Spain, and the United States, this paper discusses how economic trade-offs affecting mortgage resolution differ in crises. Depending on country circumstances, the economic benefits of temporary forbearance and loan modifications for struggling households could outweigh their costs.
Keywords:
WP; loan modification; unsecured debt; foreclosure procedure; negative equity; central bank; Debt overhang; foreclosure; housing crisis; mortgage distress; loan restructuring; foreclosure moratorium; loan renegotiation; due diligence; foreclosure process; foreclosure alternative; mortgage workout; loan counseling; Mortgages; Loans; Housing prices; Debt relief; Debt service; Global