Financial Supervisory Authority and Central Bank of Iceland merge

More and more central banks are becoming responsible for banking/financial supervision.

Iceland joins the growing list:

The Financial Supervisory Authority and the Central Bank of Iceland merged at the turn of the year, under the name Central Bank of Iceland. The merger gives rise to a strong and independent institution whose objective is to enhance trust, transparency, and efficiency in the administration of economic affairs and financial supervision in Iceland.

The prelude to the merger stems from the October 2018 decision by the Ministerial Committee on Economic Affairs and Financial System Restructuring to begin reviewing the statutory framework for monetary policy, macroprudential policy, and financial supervision following wide-ranging examination and preparation.

The institution operates pursuant to the Act on the Central Bank of Iceland, no. 92/2019, which entered into force on 1 January 2020. According to the Act, the Central Bank shall promote price stability and financial stability, as well as undertaking tasks consistent with its role as a central bank, such as maintaining international reserves and promoting a safe, effective financial system, including payment intermediation. Furthermore, the Central Bank is now responsible for the tasks entrusted by law and Governmental directives to the Financial Supervisory Authority, and the Financial Supervisory Authority is now part of the Central Bank. The Bank shall therefore monitor supervised entities to ensure that their activities are in compliance with the law and with Governmental directives, and that they are in other respects consistent with sound and appropriate business practices. In addition, the Central Bank shall promote the implementation of the Government’s economic policy as long as it does not consider this inconsistent with the Bank’s objectives.

The Governor of the Central Bank directs and is responsible for the Bank’s operations and is authorised to take decisions on all matters not entrusted to others by law. Decisions on the application of the Bank’s monetary policy instruments are taken by the Monetary Policy Committee, decisions on the application of financial stability policy instruments are taken by the Financial Stability Committee, and decisions falling under the aegis of the Financial Supervisory Authority are entrusted to the Financial Supervision Committee. The Governor and the Deputy Governors take joint decisions on the management of the international reserves, the adoption of rules and protocols, and last-resort lending. There are three Deputy Governors, whose respective purviews are monetary policy, financial stability, and financial supervision.

The Governor of the Central Bank is Ásgeir Jónsson. Rannveig Sigurdardóttir is Deputy Governor for Monetary Policy, Gunnar Jakobsson is Deputy Governor for Financial Stability, and Unnur Gunnarsdóttir is Deputy Governor for Financial Supervision. Gunnar Jakobsson will join the Bank on 1 March 2020, and Governor Ásgeir Jónsson will undertake the duties of Deputy Governor for Financial Stability in the interim.

The Central Bank of Iceland’s operations are housed in two main locations: at Kalkofnsvegur 1 in Reykjavík, where the Bank has had its offices since 1987, and at Katrínartún 2 in Reykjavík, where the Financial Supervisory Authority has been located in recent years. The objective is to house all operations at Kalkofnsvegur, and plans for the physical merger are already underway.

At the end of 2019, the Central Bank of Iceland employed 170 members of staff and the Financial Supervisory Authority 120. The new Central Bank therefore has a staff of 290 at the beginning of 2020.

They had a first meeting as well.

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