## Iceland: Financial System Stability Assessment

_IMF Staff Country Reports, June 23, 2023_

## Source details

**Canonical URL:** [Iceland: Financial System Stability Assessment](https://www.imf.org/en/publications/cr/issues/2023/06/22/iceland-financial-system-stability-assessment-535055)

## Other formats

- [Markdown version](/en/publications/cr/issues/2023/06/22/iceland-financial-system-stability-assessment-535055/index.md)
- [Structured JSON version](/en/publications/cr/issues/2023/06/22/iceland-financial-system-stability-assessment-535055/index.json)
- [Bundle manifest](/en/publications/cr/issues/2023/06/22/iceland-financial-system-stability-assessment-535055/bundle-manifest.json)

## Bibliographic details
- Published: June 23, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400246128.002

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### Executive summary and key findings
- 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.

### Stress testing and vulnerabilities
- 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.

### Policy and regulatory developments
- 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.

### Context and systemic resilience
- 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.

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## Content in this bundle

- **Iceland: Financial System Stability Assessment; IMF Country Report No. 23/220; May 25, 2023**
  - [Iceland: Financial System Stability Assessment; IMF Country Report No. 23/220; May 25, 2023 (Markdown version)](/-/media/files/publications/cr/2023/english/1islea2023002.pdf.md){rel="alternate" type="text/markdown"}
  - [Iceland: Financial System Stability Assessment; IMF Country Report No. 23/220; May 25, 2023 (PDF)](/-/media/files/publications/cr/2023/english/1islea2023002.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2023/06/22/iceland-financial-system-stability-assessment-535055_