Minutes of the meeting of the Financial Stability Council on October 9 2017

Meeting of the Financial Stability Council, held at the Ministry of Finance and Economic Affairs, 9 October 2017.

Council members: Benedikt Jóhannesson, Minister of Finance and Economic Affairs, Chair of the Council; Már Guðmundsson, Governor of the Central Bank; Unnur Gunnarsdóttir, Director General of the Financial Supervisory Authority.

Other attendees: Guðrún Þorleifsdóttir, Director General of the Department of Economic Affairs and Financial Services at the Ministry of Finance and Economic Affairs; Harpa Jónsdóttir, Director of the Financial Stability Department at the Central Bank; Jón Þór Sturluson, Deputy Director General of the Financial Supervisory Authority; and Tinna Finnbogadóttir, secretary of the Financial Stability Council.

The meeting was called to order at 16:32 hrs

1. Systemic Risk Committee report

The chair of the Systemic Risk Committee reviewed the Committee's report to the Financial Stability Council. The real estate market was discussed, as were tourism-related risks that could materialise in the event of a sudden turnaround. The banks' resilience is excellent in terms of both capital and liquidity. Risk premia in the global capital markets are relatively low at present despite some uncertainty, including in the world's largest economies. The assessment of the current situation does not indicate that financial stability is threatened in any way.

2. Quarterly decision on the countercyclical capital buffer

The Systemic Risk Committee's recommendation that the countercyclical capital buffer be held unchanged from the last meeting, held on 30 September 2016, was approved. The countercyclical capital buffer will therefore remain at 1.25% for all financial undertakings, both individually and on a consolidated basis, apart from those that are exempt from capital buffers pursuant to Article 86(d), Paragraph 4 of the Act on Financial Undertakings, no. 161/2002.

3.  Letter from Association of Icelandic Savings Banks on the imposition of the systemic risk buffer

The Financial Stability Council received a letter from the Association of Icelandic Savings Banks, dated 3 October 2017, on the imposition of the systemic risk buffer. The letter presents arguments in favour of exempting the savings banks from the systemic risk buffer when the current guidelines for the buffer are reviewed. A position will be taken on this once analysis has been done and a decision made.

4.   Press release

Approved unamended.

The meeting was adjourned at 17:09 hrs.