Central Bank of Iceland

The Central Bank of Iceland is an independent institution owned by the State and operating under the auspices of the Prime Minister. Its objective is to promote price stability, financial stability, and sound and secure financial activities. The Bank shall also undertake such tasks as are consistent with its role as a central bank, such as maintaining international reserves and promoting a safe, effective financial system, including domestic and cross-border payment intermediation.
As of 1 January 2020, the Central Bank is responsible for the tasks entrusted by law and Governmental directives to the Financial Supervisory Authority, and the financial supervision is now part of the Central Bank. The Bank shall therefore monitor supervised entities to ensure that their activities are in compliance with the law and with Governmental directives, and that they are in other respects consistent with sound and appropriate business practices.
With the approval of the Minister, the Central Bank may declare a quantitative target for inflation. The target is currently, from 2001, defined as a twelve-month inflation rate of 2½%. The Central Bank is authorised, with the approval of the Minister, to declare a target for the exchange rate of the Icelandic króna versus foreign currencies. The Central Bank is required to promote the implementation of the Government’s economic policy as long as it does not consider this inconsistent with the Bank’s objectives.

Monetary Policy Committee

Decisions on the application of the Central Bank's monetary policy instruments shall be taken by the Monetary Policy Committee. Decisions by the Monetary Policy Committee must be based on the Bank's price stability objective and a thorough assessment of the economic situation and outlook.


Financial Stability Committee

Decisions on the application of the Central Bank’s financial stability policy instruments shall be taken by the Financial Stability Committee. Decisions taken by the Financial Stability Committee must be based on the law and on a thorough assessment of the current situation of and outlook for the financial system


Financial Supervision Committee

The Financial Supervision committee shall take decisions entrusted to the Financial Supervisory Authority by law or Governmental directives. The Committee may assign to the Deputy Governor for Financial Supervision its authority to take non-major decisions.


International collaboration

The Central Bank collaborates in a number of ways with a large number of foreign financial institutions, including other central banks, not least in the Nordic region. It also engages in regular cooperation with the European Central Bank and the Organisation for Economic Co-operation and Development (OECD) and is a shareholder in the Bank for International Settlements (BIS) in Basel, Switzerland. The Central Bank represents Iceland at the International Monetary Fund (IMF).