Second Meeting of the Financial Stability Council in 2015

The second meeting of the Financial Stability Council in 2015 was held on Tuesday, 14 April, in the Ministry of Finance and Economic Affairs. The Financial Stability Council is the authorities' official forum for collaboration on financial stability. The Council serves as venue for consultation, exchange of information and policy formulation on financial stability and co-ordinates the preparedness of public authorities for financial crises.

In the estimation of the Financial Stability Council, financial system risk is for the most part unchanged since the last meeting. External circumstances are positive for the financial system, the external balance is favourable and conducive to stability. The banks' situation is very good, although one-off items still dominate their performance, and their need for funding in foreign currencies in the coming years is moderate. The principal factors which could threaten the stability which has been achieved are connected with the removal of capital controls.

The following matters were on the meeting agenda:

• Report from the Systemic Risk Committee
• First intermediate objective for financial stability
• Systemically important supervised entities
• Loan-to-value and debt-service-to-income ratios
• Other matters

According to an analysis by the Systemic Risk Committee, which works for the Financial Stability Council, four supervised entities are considered systemically important in Iceland: Landsbankinn hf., Arion Bank hf., Íslandsbanki hf. and the Housing Financing Fund. The analysis of the Systemic Risk Committee is based on European Banking Association guidelines on the criteria for the assessment of other systemically important institutions (EBA/GL/2014/10). The Financial Stability Council confirms the systemic importance of these four entities, which will be supervised accordingly.