The Central Bank of Iceland is required by law to promote financial stability and sound and secure financial activities. The Bank shall also undertake such tasks as are consistent with its role as a central bank, such as promoting a safe, effective financial system, including domestic and cross-border payment intermediation.
Oversight of financial market infrastructures
The Bank’s oversight of financial infrastructure is aimed at promoting security, efficiency, and efficacy of core infrastructure in the Icelandic financial system. The term core infrastructure, or systemically important financial market infrastructure, refers to infrastructure that could catalyse and/or spread system-wide disruption of, for instance, payment or securities settlement systems.
Operational security and cybersecurity
The Central Bank of Iceland shall promote a safe and effective financial system, including domestic and cross-border payment intermediation. In this context, it is important both to ensure that financial institutions can provide uninterrupted service and to safeguard the operational security of financial market infrastructure to the maximum extent possible.
The Central Bank administers Iceland’s cooperative forum on the operational security of financial market infrastructure, called SURF, and the cyberattack testing framework for companies and institutions of importance to the Icelandic financial system.
Interbank payment system
The Central Bank of Iceland’s interbank payment system is an independent system owned by the Central Bank. 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 m.kr. or more that are transferred between customers of two financial institutions. Payments between financial institutions in amounts of less than 10 m.kr. are routed through the retail component of the system, EXP.
Further development
One of the Central Bank’s tasks is to promote further development, including in the fields of quality and security in the financial market, through encouragement and direct measures. The Bank can provide support for innovation and renewal of financial market infrastructure and can promote cooperation, harmonisation, and integration in the financial system. Among the actions it has taken is to establish and operate cooperative fora for the financial system. These include the Payment Council, a forum for stakeholders in payment intermediation to exchange information; the Rulebook Council, which issues and maintains rules manuals for financial market infrastructure; the Strategic Forum, a forum for innovation and future policy formation relating to financial market infrastructure; and SURF, the cooperative forum on the operational security of financial market infrastructure.
Banknotes and coins
The Central Bank of Iceland has the exclusive right to issue banknotes and coin in Iceland, as do central banks in most countries. The Bank gives priority to maintaining the credibility of Icelandic currency, in part by incorporating security features into banknotes. The Bank compiles and publishes information on the denomination of banknotes and coin in circulation outside the Central Bank of Iceland.