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Europe > Iceland

You are looking at 1 - 10 of 16 items for :

  • Type: Journal Issue x
  • Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill x
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Cover Global Financial Stability Notes
Pension Funds and Financial Stability
This Global Financial Stability Note examines the growth of the pension fund sector and the potential financial stability implications. Historically, pension funds have been seen as a contributor to financial stability because of their long-term and well-diversified liabilities. However, the sector has undergone significant structural shifts accelerated by a prolonged period of low interest rates, increasing its exposure to traditional risks while introducing emerging risks; this is reflected in growing intra-financial sector interconnectedness and exposure to long-term sovereign bonds. The recent transition to higher interest rates should be positive for the pension sector, albeit its pace and abruptness has been associated with liquidity stress and contagion risks in some countries.
Keywords:
Pension Funds; Financial Stability; Assets; Risks; Pension Plans; major pension fund sector; IMF Library; major pension savings market; structural liquidity; asset-liability duration mismatch; risk analysis; Pension spending; Pensions; Financial sector stability; Liquidity risk; Global
Cover IMF Staff Country Reports
Iceland: Financial Sector Assessment Program-Technical Note on Management and Supervision of Climate-Related Financial Risks in the Banking Sector
International Monetary Fund. Monetary and Capital Markets Department
This technical note on Iceland presents analyses management and supervision of climate-related financial risks in the banking sector. The Icelandic authorities are committed to addressing climate change issues and reaching ambitious objectives to reduce greenhouse gas emissions. Domestic coordination with the Central Bank of Iceland (CBI) should be enhanced to support adequate consideration of climate-related financial risks within the financial sector. CBI should as soon as possible address the data quality and availability issues on climate-related financial risks. CBI has started to incorporate climate-related financial risks within the macroprudential surveillance and supervisory processes. The intensity and thoroughness of systematic supervision of climate-related financial risks within the banking sector should be gradually increased. In addition, banks should fully incorporate climate-related financial risks into their risk management frameworks in addition to their commendable efforts toward transparency. Finally, CBI should determine whether banks’ capital and liquidity buffers are adequate to cover climate-related financial risks.
Keywords:
climate-related financial risks; government initiative; EU norm; Climate-Related Financial risk; Iceland's strategy; Climate change; Commercial banks; External balance assessment (EBA); Credit risk; Global
Cover IMF Staff Country Reports
Iceland: Financial Sector Assessment Program-Technical Note on Cyber and Operational Resilience, Supervision and Oversight
International Monetary Fund. Monetary and Capital Markets Department
This technical note focuses on cyber and operational resilience, supervision and oversight in Iceland. The Icelandic financial sector has not experienced seriously disruptive cyber-attacks or operational issues in recent years, but threats are growing. Iceland’s dependence on international connectivity for both debit and credit card systems introduces a significant vulnerability into the payment system. There is no dedicated cyber security strategy for the finance sector. Operational risk experts in the Central Bank of Iceland (CBI) are experienced and well regarded by financial institutions, but more resources are needed to provide adequate coverage of this increasingly important area. The supervision of financial institutions’ cybersecurity is highly dependent on self-assessments by the regulated entities themselves and independent reviews carried out by third parties. CBI should regularly revise the list of critical operations and critical service providers for internal use and for presentation to the Financial Stability Committee and Financial Stability Council. CBI is encouraged to enhance its incident dashboard by summarizing cyber incidents and examining trends.
Keywords:
C. supervision approach; payment services directive; markets authority; market infrastructure; cash payment; Cyber risk; Financial sector stability; Financial sector; Payment systems; Operational risk; Europe; Baltics; Global
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 Working Papers
Firm Leverage and Boom-Bust Cycles
Can Sever
This paper explores the dynamic relationship between firm debt and real outcomes using data from 24 European economies over the period of 2000-2018. Based on macro data, it shows that a rise in credit to firms is associated with an increase in employment growth in the short-term, but employment growth declines in the medium-term. This pattern remains similar, even when the changes in credit to households are accounted for. Next, using data from a large sample of firms, it shows that firm leverage buildups predict similar boom-bust growth cycles in firm employment: Firms with a larger increase in leverage experience a boost in employment growth in the short-term, but employment growth decreases in the medium-term. Relatedly, the volatility of employment growth increases in the aftermath of firm leverage buildups. Finally, this paper provides suggestive evidence on the role of a financial channel in the relationship between firm leverage buildups and employment growth. The results show that a rise in firm leverage is associated with a persistently higher debt service ratio, pointing the drag on finances. Consistently, boom-bust growth cycles in the aftermath of firm leverage buildups are not limited to employment growth, but are also pronounced for investment. Moreover, the medium-term decline in firm employment growth as predicted by leverage buildups becomes even larger if aggregate financial conditions tighten. The findings are in favor of “lean against the wind” approach in policy making.
Keywords:
Firm leverage; firm debt; household debt; leverage cycles; employment; investment; boom-bust cycles; ORBIS; leverage buildup; employment growth; leverage cycle; growth cycle; cycles in the aftermath; Business cycles; Credit; Consumer credit; Credit booms; Europe; Global
Cover IMF Working Papers
UnFEAR: Unsupervised Feature Extraction Clustering with an Application to Crisis Regimes Classification
Mr. Jorge A Chan-Lau
We introduce unFEAR, Unsupervised Feature Extraction Clustering, to identify economic crisis regimes. Given labeled crisis and non-crisis episodes and the corresponding features values, unFEAR uses unsupervised representation learning and a novel mode contrastive autoencoder to group episodes into time-invariant non-overlapping clusters, each of which could be identified with a different regime. The likelihood that a country may experience an econmic crisis could be set equal to its cluster crisis frequency. Moreover, unFEAR could serve as a first step towards developing cluster-specific crisis prediction models tailored to each crisis regime.
Keywords:
clustering; unsupervised feature extraction; autoencoder; deep learning; biased label problem; crisis prediction; WP; crisis frequency; crisis observation; crisis risk; crisis data points; machine learning; Early warning systems; Global
Cover Fiscal Monitor, October 2016
Fiscal Monitor, October 2016
Debt: Use It Wisely
Ms. Marialuz Moreno Badia

Abstract

Drawing on an expanded data set covering emerging markets and low-income countries as well as advanced economies, this issue examines the extent and makeup of global debt and asks what role fiscal policy can play in facilitating the adjustment. The analytical framework explicitly models the interlinkages between private and public debt in analyzing the role of fiscal policy in the deleveraging process. Country case studies provide useful insights on what fiscal policy should and should not do to facilitate deleveraging while minimizing the drag on the economy.

Keywords:
FM; def; country abbreviation; bottom; nominal GDP; statistics manual; role fiscal policy; private sector leverage; potential GDP; balance sheet repair; Private debt; Fiscal stance; Macroeconomic and fiscal forecasts; Global; Africa; North Africa; Asia and Pacific; Middle East; IMF staff estimate; credit system; deflation episode; debt level; debt-restructuring program; fiscal policy intervention; debt deflation episode; debt development; debt overhang problem; debt problem; debt write-off; debt repayment; Financial statements; Emerging and frontier financial markets; Europe
Cover Policy Papers
Review of Access Limits and Surcharge Policies
International Monetary Fund
Scope and strategy: This paper reviews access limits and surcharge policies in the Fund’s General Resources Account (GRA). It builds on the preliminary Executive Board discussion that took place in May 2014, against the backdrop of the 14th Review quotas expected to become effective early in 2016, which will on average double individual members’ quotas. At the meeting in 2014, most Directors considered that a moderate increase in normal access limits in SDR terms would broadly restore the normal Fund access to levels considered acceptable in 2009, and saw merit in adjusting the surcharge threshold to allow for a moderate increase in the SDR value of credit not subject to the charge.
Keywords:
PP; IMF executive board review; financing role; threshold; SDR; refund; surcharge policy; b. paragraph 4; decisions III; Credit; Personal income; Currencies; Balance of payments need; Credit risk; Global
Cover IMF Staff Country Reports
Iceland: Report on Observance of Standards and Codes (ROSC)
International Monetary Fund. European Dept.
This Report on Observance of Standards and Codes on Iceland summarizes the findings and recommendations of the assessment. This assessment of the current state of the implementation of the Basel Core Principles for Effective Banking Supervision in Iceland has been completed as a stand-alone Report on the Observance of Standards and Codes undertaken by the IMF during March of 2014 at the request of the Icelandic authorities. It is advised to ensure planned legislative amendments clarify the roles regarding banking supervision of liquidity risk, including corrective action. Ensure planned legislative amendments clarify Financial Supervisory Authority in Iceland (FME) actions in the enforcement of buffers. It is also recommended to amend processes, systems and practices in order to use the full definition of qualified holder, beyond the mere quantitative thresholds. The assessment also recommends developing rules and guidelines for banks on the benchmarks, standards, and procedures that the FME will follow in determining the adequacy of bank’s risk management and governance systems.
Keywords:
ISCR; CR; FME monitor; interest rate; business plans; corporate governance; FME authority; FME supervision; reform program; FME focus; financial system; FME methodology; FME decision making process; FME onsite work; Legal support in revenue administration; Bank supervision; Commercial banks; Basel Core Principles; Bank risk management; Global; banking sector
Cover IMF Working Papers
Dealing with Private Debt Distress in the Wake of the European Financial Crisis A Review of the Economics and Legal Toolbox
Ms. Yan Liu
and
Mr. Christoph B. Rosenberg
The private non-financial sector in Europe is facing increased challenges in meeting its debt servicing obligation. In response, governments are revisiting legal tools and—in some cases—institutional arrangements to deal with over-indebtedness. For households, where the problem in some countries is large but no established best practice exists, reforms have generally sought to allow debtors a fresh start while minimizing moral hazard and preserving bank solvency and credit discipline. For the corporate sector, efforts have focused on facilitating debt restruturing (including through out of court mechanisms). Direct government intervention has been rare.
Keywords:
WP; country; government; procedure; court; track court approval procedure; private sector debt; household insolvency; corporate insolvency; government intervention; insolvency proceeding; a number of country; IMF country desk; court insolvency regime; government support scheme; Solvency; Debt restructuring; Private debt; Europe; Baltics