Iceland: Financial Sector Assessment Program-Technical Note on Macroprudential Policy
IMF Staff Country Reports, July 28, 2023
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Bibliographic details
- Published: July 28, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400249457.002
Overview
- Publication date: July 28, 2023
- Core focus: Macroprudential policy in Iceland, with recent emphasis on the property market due to its importance for households’ balance sheets, banks’ loan portfolios, and potential systemic risks.
- Key conclusion: The Central Bank of Iceland (CBI) has a strong institutional framework and analytical capacity for macroprudential policy, but data gaps and model enrichment opportunities remain; authorities should remain ready to act further if vulnerabilities persist.
Institutional framework and powers
- Findings:
- The CBI has a strong institutional framework for macroprudential policy, assuring the willingness to act.
- The macroprudential framework promotes the ability to act promptly.
- As the financial supervisor, the CBI controls prudential tools and may exercise its power as necessary to ensure financial stability.
- Institutional arrangements encourage effective cooperation and coordination with other institutions.
Surveillance, analytics, and data
- Findings:
- CBI surveillance and systemic risk assessment rely on comprehensive quantitative information and constructive dialogue with the industry.
- The CBI employs various models and stress tests for systemic risk monitoring.
- The strong analytical capacity can be further enhanced by filling data gaps and enriching models.
Recent measures and policy stance
- Findings and guidance:
- Recent macroprudential measures target the property market and are described as going in the right direction.
- Recommendation: Authorities should stand ready to take further actions if vulnerabilities persist.
Subjects and keywords (as stated in the source)
- Subject: Financial institutions, Financial sector policy and analysis, Financial sector stability, International organization, Loans, Macroprudential policy, Monetary policy, Mortgages, Systemic risk
- Keywords: Baltics, capital markets department, CBI share, Financial sector stability, Global, house price misalignment, housing market Mispricing, Loans, Macroprudential decision making, Macroprudential policy, Mortgages, Systemic risk
Content in this bundle
- 1islea2023006