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Iceland: Financial Sector Assessment Program-Technical Note on Financial Safety Net Crisis Management
Author:
International Monetary Fund. Monetary and Capital Markets Department
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Series:
IMF Staff Country Reports
Volume/Issue:
Volume 2023: Issue 281
Language:
English
Publication Date:
28 Jul 2023
DOI:
https://doi.org/10.5089/9798400251993.002
ISBN:
9798400251993
ISSN:
1934-7685
Pages:
40
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
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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.
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Cover IMF Staff Country Reports
IMF Staff Country Reports
ISSN:
1934-7685
Publisher:
International Monetary Fund