Payment system

Central Bank of Iceland Interbank Payment System

The Central Bank of Iceland’s interbank payment system is an independent system owned by the Central Bank. The system is subject to the Rules on the Central Bank of Iceland Interbank Payment System, no. 1030/2020, dated 22 October 2020. The interbank system is divided into two components, the gross settlement component (RTGS) and the retail component (EXP). The RTGS component handles large-value payments of 10 or more that are transferred between customers of two financial institutions. In the RTGS component, real-time gross settlement is executed in Icelandic krónur. Transactions settled in the RTGS component include transactions between the Central Bank and deposit institutions, on the one hand, and transactions in the interbank foreign exchange market, on the other. The component also handles settlement for other important settlement systems, such as the securities settlement and retail payment systems.

Payments between financial institutions in amounts of less than 10 are routed through the retail component of the system, EXP. Retail payments are settled in the RTGS component twice a day.

System operating hours

Each component of the interbank system has its own operating hours. The RTGS component is open for conventional payment intermediation between system participants’ customers between 09:00 hrs. and 16:30 hrs. on business days. If 31 December falls on a business day, the RTGS component of the system is open from 09:00-12:00 hrs. on that day.

The EXP component of the system is open 24 hours a day, seven days a week. Settlement of retail payments takes place twice a day, at 08:30 hrs. and 16:00 hrs.

Settlement of securities transactions is executed at the Nasdaq CSD securities depository five times a day, at 09:15 hrs., 10:30 hrs., 11:45 hrs., 13:00 hrs., 14:00 hrs., and 15:20 hrs.

Settlement of securities transactions is executed at Verðbréfamiðstöð Íslands (VBM) three times a day, at 10:00 hrs., 13:30 hrs. and 15:30 hrs.


Participants in the Central Bank of Iceland’s interbank payment system may include domestic and foreign financial institutions approved by the Central Bank. Current participants are:

  • Arion Bank hf.
  • Clearstream Banking S.A. in Luxembourg
  • Euroclear Bank SA/NV in Belgium
  • Íslandsbanki hf.
  • indó sparisjóður hf.
  • Kvika banki hf.
  • Landsbankinn hf.
  • Sparisjóður Austurlands (East Iceland Savings Bank) hf.
  • Sparisjóður Höfðhverfinga ses.
  • Sparisjóður Strandamanna (Strandamenn Savings Bank) ses.
  • Sparisjóður Suður-Þingeyinga ses.
  • Central Bank of Iceland.

Participants and requirements for system participation

Chapter II of the Rules on the Central Bank of Iceland Interbank Payment System discusses participants and requirements for system participation.

The Central Bank of Iceland takes a decision on the membership of new system participants and exclusion from system membership.

Participants may be institutions as defined in Article 2, Item 2 of Act no. 90/1999 and other parties approved by the Central Bank, provided that they satisfy the requirements for participation in Article 4 of the Rules on the Interbank System.

Financial institutions established and licensed abroad that have operations in Iceland may only be granted membership of the interbank system if they are subject to supervision in their home state that is comparable to that provided for in the Act on Official Supervision of Financial Activities, no. 87/1998.

Intermediaries, settlement agents, and clearing institutions as provided for in Article 2, Items 3, 4, and 8 of Act no. 90/1999 may participate in the interbank system upon receiving approval from the Central Bank of Iceland. Their rights and responsibilities, as well as those of other indirect participants, shall be in accordance with Act no. 90/1999 and Articles 3 and 4 of the Rules, as applicable.

The Central Bank of Iceland is a direct participant in the interbank system.

Overdraft limits and settlement collateral

Participants enter into a written contract with the Central Bank concerning their overdraft limit in the interbank system. The limit applies to the participant’s combined balance in the system’s gross settlement and retail components. To cover the overdraft, the participant shall provide collateral that the Central Bank evaluates and approves. The amount of the collateral, adjusted for deductions, may not fall below the amount of the overdraft limit of the participant concerned.

Value of collateral

In assessing the value of securities and other collateral provided in connection with a collateral agreement and deemed satisfactory by the Central Bank, a haircut shall be calculated on the reference price. The haircut on securities and other eligible collateral is published on the Central Bank website. The Central Bank may calculate a haircut in excess of that posted on its website if the Bank considers this necessary; for instance, due to market conditions.

A list of interbank system collateral deemed eligible by the Central Bank is posted on the Central Bank website.

Special limitations apply to covered bonds. The limitations are as follows:

  • Covered bonds shall be issued in accordance with Act no. 11/2008.
  • The market value of the series shall be at least 5, and it must be confirmed that this amount has been sold.
  • The collateral portfolio underlying the covered bonds must consist solely of bonds secured by residential property in Iceland.
  • Financial undertakings may provide as collateral up to 3 market value from their own covered bond issues.
  • Covered bonds may secure a maximum of 50% of each participant’s overdraft limit in the interbank payment system.
  • The bonds must be subject to active market making.


The Central Bank of Iceland determines the tariff for interbank system operations in accordance with Article 43 of the Act on the Central Bank of Iceland, no. 92/2019. The tariff is revised annually and published on the Central Bank website. Further provisions on fees shall be included in participants’ contractual agreements with the Central Bank of Iceland.

Information on Interbank Payment System tariff Participants pay an annual fee that is spread over twelve (12) months and direct-debited from participants’ accounts on the second business day of each month.


Oversight of financial infrastructure in the Central Bank aims at promoting security, efficiency, and efficacy of core infrastructure in the Icelandic financial system, or systemically important financial market infrastructure, thereby safeguarding financial stability.