Decisions on the application of the Central Bank’s financial stability policy instruments are taken by the Financial Stability Committee (FSN) in accordance with the Act on the Central Bank of Iceland, no. 92/2019. The Committee’s decisions must be based on a thorough assessment of the current situation and outlook for the financial system. Examples of financial stability policy instruments include rules on financial institutions’ capital buffers, foreign exchange balance, and liquidity and net stable funding, as well as rules restricting the risk that borrowers may take, such as restrictions on loan-to-value ratios and debt service-to-income ratios.

Members of the Financial Stability Committee are the Governor of the Central Bank, the three Deputy Governors, and three experts in financial market affairs or economics who are appointed by the Minister responsible for financial stability for a term of five years. The Permanent Secretary or an appointed official from the Ministry responsible for financial stability also participates in Committee meetings as a non-voting member with the right to address the meeting and present proposals. The composition of the Financial Stability Committee shall be such that the Committee’s members collectively possess sufficient expertise, qualifications, and experience to carry out the tasks entrusted to it. The Minister may only appoint the same person to the FSN twice. The Governor chairs the Financial Stability Committee, and the Deputy Governor for Financial Stability serves as vice-chair.

The Committee is currently composed of the following members: Ásgeir Jónsson, chair; Tómas Brynjólfsson; Rannveig Sigurðardóttir; Björk Sigurgísladóttir; Axel Hall; Bryndís Ásbjarnardóttir; and Guðmundur Kristján Tómasson. As is noted above, a Ministry official also attends FSN meetings.

Tasks of the Financial Stability Committee

The tasks of the Financial Stability Committee are to:

• Assess the current situation in and outlook for the financial system, systemic risk, and financial stability.  
• Discuss and define the actions deemed necessary at any given time in order to affect the financial system so as to strengthen and preserve financial stability, and to this end, make recommendations to the appropriate Governmental authorities when warranted. 
• Approve Governmental directives and take the decisions entrusted to the Committee by law. 
• Decide which supervised entities, infrastructure, and markets shall be considered systemically important and of such a nature that their activities could affect financial stability. 

Meetings of the Financial Stability Committee

The Financial Stability Committee shall meet at least four times a year. In addition, the Financial Stability Committee may meet if its chairperson or three of its members so request. The Financial Stability Committee shall adopt rules of procedure that include provisions on the preparation of, rationale for, and presentation of its decisions. The Financial Stability Committee’s decisions on the application of financial stability policy instruments shall be published and an account given of the rationale for the decisions, together with an assessment of the situation, and minutes of its meetings shall be published unless such publication can be expected to have an adverse impact on financial stability. Meetings of the Financial Stability Committee shall be deemed to have a quorum if five of its seven members are in attendance. Decisions by the Financial Stability Committee shall be taken by a simple majority of votes; in the case of a tie, the chairperson shall cast the deciding vote.

The Financial Stability Committee shall report to Parliament on its work once a year. The report shall be discussed in the Parliamentary committee of the Speaker’s choosing.

Financial Stability Committee Rules of Procedures

Financial Stability Committee statements and minutes