The Central Bank's international reserves are the bank's external assets in foreign currencies, i.e. deposits in foreign banks, bond holdings, assets with the International Monetary Fund, gold and other foreign assets.
The purpose of the reserves is to mitigate the impact of fluctuations in the balance of payments between Iceland and abroad, for example in the exchange rate of the króna and thus prices. The reserves can be used in foreign exchange market transactions to influence the exchange rate of the króna.
Furthermore, the reserves are intended to contribute to general stability in the country's financial system and to the Icelandic state's ability to service its foreign debt.
The reserve is also a safety net that can be used if major and unexpected shocks occur that undermine foreign currency generation.
At the end of 2023, the value of international reserves amounted to about ISK 790 billion, about 19% of the year's GDP, 29% of the money supply and savings (M3) and equivalent to 5 months of imports of goods and services.