Working Group Considers Recommendations by Banking Expert

At a cabinet meeting on 31 March, Iceland’s government discussed a report presented on 30 March by Finnish banking expert Kaarlo Jännäri. Jännäri provides an account of his examination of the legal framework and implementation of banking supervision in Iceland, together with eight proposals for improvements. The government welcomed Jännäri´s contribution and has decided to appoint a working group to examine his recommendations and find ways of implementing practical proposals as soon as possible. The group will consist of representatives of three ministries and is to deliver its proposals to the government no later than 15 April.

The construction and publication of the report is a part of of the November 2008 Stand-By Arrangement with the International Monetary Fund, according to which the Icelandic Government undertook to invite an experienced bank supervisor to assess the regulatory framework and supervisory practices in Iceland and to propose needed changes as a result of the collapse of the banks. In particular, the expert was called upon to assess the framework of rules on liquidity management, lending to related parties, large exposures, cross-ownership, and the “fit and proper” status of owners and managers. It was agreed that the assessment would be completed and made public by the end of March 2009. As stated earlier the report was published on March 30 and is available in full on the websites of the Icelandic government.

Reykjavik 31 March 2009