{
  "title": "Iceland: Financial System Stability Assessment",
  "publication": "IMF Staff Country Reports, June 23, 2023",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2023/06/22/iceland-financial-system-stability-assessment-535055",
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  "summary": "This paper presents Iceland’s Financial System Stability Assessment. Iceland has made solid progress since the 2008 crisis and the last Financial Sector Assessment Program update in restructuring banks and implementing important financial sector reforms.",
  "sections": [
    {
      "heading": "Executive summary and key findings",
      "content": "- The paper presents Iceland’s Financial System Stability Assessment.\n- Iceland has made solid progress since the 2008 crisis and the last Financial Sector Assessment Program update in restructuring banks and implementing important financial sector reforms.\n- Iceland has transposed many EU Directives and Regulations into national law, improving the regulatory, supervisory, and crisis management frameworks.\n- Banks are resilient to solvency stress under the adverse scenario but are sensitive to interest rate changes.\n- Liquidity stress can generally be handled but there are vulnerabilities.\n- The value of pension funds’ assets declines substantially in the adverse scenario, reducing future pension values materially.\n- Iceland’s robust financial system has weathered the impact of the coronavirus disease pandemic well, owing to substantially improved macro-financial frameworks since the global financial crisis."
    },
    {
      "heading": "Stress testing and vulnerabilities",
      "content": "- Solvency: Banks remain resilient under the adverse scenario.\n- Interest rate sensitivity: Banks are sensitive to interest rate changes.\n- Liquidity: Liquidity stress is generally manageable, but specific vulnerabilities exist.\n- Pensions: Pension funds’ asset values decline substantially in the adverse scenario, materially reducing future pension values."
    },
    {
      "heading": "Policy and regulatory developments",
      "content": "- Bank restructuring and financial sector reforms implemented since 2008.\n- Transposition of many EU Directives and Regulations into national law.\n- Improvements to regulatory, supervisory, and crisis management frameworks."
    },
    {
      "heading": "Context and systemic resilience",
      "content": "- The financial system’s robustness helped Iceland weather the impact of the coronavirus disease pandemic.\n- Improvements reflect substantially stronger macro-financial frameworks since the global financial crisis.\n\n---\n\n Content in this bundle\n\n- Iceland: Financial System Stability Assessment; IMF Country Report No. 23/220; May 25, 2023\n  - Iceland: Financial System Stability Assessment; IMF Country Report No. 23/220; May 25, 2023 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Iceland: Financial System Stability Assessment; IMF Country Report No. 23/220; May 25, 2023 (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: June 23, 2023",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798400246128.002",
    "The paper presents Iceland’s Financial System Stability Assessment.",
    "Iceland has made solid progress since the 2008 crisis and the last Financial Sector Assessment Program update in restructuring banks and implementing important financial sector reforms.",
    "Iceland has transposed many EU Directives and Regulations into national law, improving the regulatory, supervisory, and crisis management frameworks.",
    "Banks are resilient to solvency stress under the adverse scenario but are sensitive to interest rate changes.",
    "Liquidity stress can generally be handled but there are vulnerabilities.",
    "The value of pension funds’ assets declines substantially in the adverse scenario, reducing future pension values materially.",
    "Iceland’s robust financial system has weathered the impact of the coronavirus disease pandemic well, owing to substantially improved macro-financial frameworks since the global financial crisis.",
    "Solvency: Banks remain resilient under the adverse scenario.",
    "Interest rate sensitivity: Banks are sensitive to interest rate changes.",
    "Liquidity: Liquidity stress is generally manageable, but specific vulnerabilities exist.",
    "Pensions: Pension funds’ asset values decline substantially in the adverse scenario, materially reducing future pension values.",
    "Bank restructuring and financial sector reforms implemented since 2008.",
    "Transposition of many EU Directives and Regulations into national law.",
    "Improvements to regulatory, supervisory, and crisis management frameworks.",
    "The financial system’s robustness helped Iceland weather the impact of the coronavirus disease pandemic.",
    "Improvements reflect substantially stronger macro-financial frameworks since the global financial crisis.",
    "**Iceland: Financial System Stability Assessment; IMF Country Report No. 23/220; May 25, 2023**"
  ],
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