Deputy Governor for Financial Stability Tómas Brynjólfsson delivered a speech at the Reykjavik Economic Conference, held at Harpa and hosted by the Central Bank of Iceland in cooperation with The Center for International Macroeconomics at Northwestern University in Illinois.
In his presentation, which formed part of a panel discussion entitled "Financial stability: The big leap or a bubble?", Tómas discussed how Iceland’s experience since the financial crisis sheds light on whether risks in the financial system have genuinely been reduced or merely shifted elsewhere within the economy. He also examined how the design of financial regulation and supervision can strengthen the resilience of the financial system without undermining economic growth.
He outlined how extensive deleveraging, strong capital and liquidity buffers in the banking system, and a macroprudential policy framework have contributed to a more resilient Icelandic financial system in the post-crisis period. He also argued that risks may have migrated, particularly to pension funds and the public sector balance sheet, highlighting the importance of maintaining a robust financial system despite calls for simpler financial regulation.