Iceland: Financial System Stability Assessment: Update

IMF Staff Country Reports, December 8, 2008

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Iceland: Financial System Stability Assessment: Update

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Bibliographic details

• Published: December 8, 2008
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781451819397.002

Summary

• This paper presents an update on Iceland’s Financial System Stability Assessment.
• Liquidity ratios, while high, now depend more than before on access to central banks’ liquidity facilities because of the turmoil in global markets, and any reduction in such access would require changes in the banks' liquidity management strategy.
• Capital levels, although above minimum levels, are below the average of the five years and may not provide adequate buffers, in light of the deterioration in the global environment and market uncertainties about the strength of banks.

Key findings

• Liquidity:
  • Liquidity ratios are high.
  • Reliance on access to central banks’ liquidity facilities has increased due to turmoil in global markets.
  • Any reduction in access to central banks’ liquidity facilities would require changes in banks' liquidity management strategy.
• Capital and buffers:
  • Capital levels are above minimum levels.
  • Capital levels are below the average of the five years.
  • Current capital may not provide adequate buffers given the deterioration in the global environment and market uncertainties about the strength of banks.

Subjects and keywords (as listed)

• Subject: Asset and liability management, Banking, Credit, Credit risk, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Liquidity, Loans, Money, Stress testing
• Keywords: asset quality, bank assets, bank bankruptcy regime, bank capital, banks exposure, banks' assets, capitalized bank, counterparty risk, CR, Credit, credit market, Credit risk, ensuring bank, financial system, Global, ISCR, Liquidity, liquidity position, Loans, net asset position, noncore assets, problem bank resolution option, return on equity, Stress testing

Content in this bundle

• Iceland: Financial System Stability Assessment—Update; IMF Country Report 08/368; August 19, 2008.
  • Iceland: Financial System Stability Assessment—Update; IMF Country Report 08/368; August 19, 2008. (Markdown version)
  • Iceland: Financial System Stability Assessment—Update; IMF Country Report 08/368; August 19, 2008. (PDF)