Third Meeting of the Financial Stability Council in 2016

The third meeting of the Financial Stability Council in 2016 was held on Tuesday, 5 July, in the Ministry of Finance and Economic Affairs. At its meeting the Council reviewed the main risk factors in the financial system and the report of the Systemic Risk Committee to the Financial Stability Council. Risk in the financial system has changed little since the Council's last meeting in May. Resilience in the private sector is still increasing and the country's foreign liabilities are shrinking. Systemic lending risk has changed little. Lending to households and corporates has increased slightly in recent months. Systemic risk arising from maturity mismatch and liquidity positions is not considered high and is for the most part unchanged since the last meeting.

The following matters were on the meeting agenda:

Quarterly assessment of the counter-cyclical buffer and annual assessment of the systemic importance of supervised entities in accordance with the official policy on financial stability.

The assessment of financial system risk factors was not regarded as giving cause to alter the counter-cyclical buffer, and the Council therefore recommends that it remain unchanged from that of the previous meeting at 1%. It was agreed that Landsbankinn hf., Íslandsbanki hf., Arion Bank hf. and the Housing Financing Fund would continue to be defined as systemically important supervised entities.

The next meeting of the Financial Stability Council will be held on 3 October 2016.