The Financial Stability Committee (FSN) of the Central Bank of Iceland takes decisions on the application of the Bank’s financial stability policy instruments. Financial stability means that the financial system is equipped to withstand shocks to the economy and financial markets, to intermediate credit and payments, and to diversify risks appropriately.
At its meeting of 23 and 24 March 2026, the Committee was given a presentation on developments and prospects for the economy and for financial stability. Members discussed the risks to financial stability in Iceland and developments internationally. They reviewed developments in domestic and foreign financial markets, including the impact and potential repercussions of the Persian Gulf war. The pension funds’ investment strategies for 2026 were presented to the Committee. The status of the real estate market was the focal point of the meeting, with emphasis on the residential housing market, the construction sector, and developments since the FSN amended borrower-based measures in response to the Supreme Court judgments in the so-called interest rate cases in late 2025. Members discussed a new indicator of housing affordability. They also discussed private sector indebtedness and financial institutions’ resilience, including their capital and liquidity positions. The Committee was given a presentation on the implementation of the EU’s third Capital Requirements Regulation (CRR III) and its impact on the banks’ risk exposure. The Committee was also given a presentation on work done by the Bank to bolster the resilience of financial market infrastructure, together with a timetable for measures such as the introduction of offline card-based payments. Furthermore, the FSN was given a presentation on a recent contingency exercise focusing on a simulated operational incident affecting financial infrastructure. In addition, the FSN discussed the framework for deposit insurance in Iceland.