14 January 2022

Seven-day term deposits to be redeemable

In its weekly transactions, the Central Bank of Iceland offers its counterparties seven-day term deposits at an interest rate 0.25 percentage points above the rate on their current accounts with the Bank.

Effective 12 January 2022, the terms of the seven-day deposits will change so as to allow counterparties to redeem them within the seven-day commitment period. If they do so, counterparties will relinquish the 0.25 percentage point premium on the amount redeemed and will also pay a redemption fee, currently 1.25 percentage points, for the days remaining in the commitment period according to the terms of the deposits.

The purpose of these changes is to remove all doubt that term deposits shall be considered liquid assets for the calculation of financial institutions’ liquidity ratios. The Central Bank’s liquidity rules are identical to Commission Delegated Regulation (EU) 2015/61 on liquidity coverage requirements. According to Article 30.41 of the Basel Framework, deposits held in central banks shall be considered liquid assets to the extent that they can be drawn down in times of stress.

Press release no. 2/2022,
14 January 2022