Minutes of the meeting of the Financial Stability Council on 24 June 2019

Meeting held at the Ministry of Finance and Economic Affairs

In attendance were: Bjarni Benediktsson, Minister of Finance and Economic Affairs, chairman; Már Guðmundsson, Governor of the Central Bank of Iceland; Unnur Gunnarsdóttir, Director General of the Financial Supervisory Authority; Guðrún Þorleifsdóttir, Director General, Department of Financial Services, Ministry of Finance and Economic Affairs; Guðrún Ögmundsdóttir, Head of liquidity risk and financial oversight at the Central Bank of Iceland; Jón Þór Sturluson, Deputy Director General of the Financial Supervisory Authority; Guðmundur Kr. Tómasson, Director of Financial Infrastructures at the Central Bank of Iceland; and Tinna Finnbogadóttir, Secretary to the Financial Stability Council.

The meeting was called to order at 15:30 hrs. on 24 June 2019

1. Presentation by chair of the Systemic Risk Committee on key aspects of the Committee’s report
   a. The foreseeable downturn in the economy in 2019, i.a. due to different circumstances in the tourism industry, was discussed. A downturn will affect domestic households and firms which will have second-round effects on the financial system. Thus, it could be said that risk that has accumulated in the recent term has been realised. It is important to monitor the interplay of this development with the market for residential and commercial real estate. The banking system has considerable resilience, but their overall liquidity position has deteriorated recently. The economy is resilient, the external position is favourable, foreign reserves ample and both public and private sector indebtedness is at a historical low. There is considerable space within fiscal and monetary policy to respond to the worsening outlook.
2. Retail payment services, preparedness and financial stability
   a. The Director of Financial Infrastructures at the Central Bank of Iceland held a presentation on retail payment services in Iceland. The progress of the renewal of infrastructures was amongst the main topics as was the development in domestic retail payment services. The Central bank presented the tools available for the bank to support its role to promote the orderly and safe functioning of payment services within Iceland and between Iceland and author countries in light of foreseeable changes in payment services.
3.  A quarterly decision on the countercyclical capital buffer
   a. The Council approved a recommendation to the Financial Supervisory Authority to keep the countercyclical capital buffer unchanged.
4. Other business.
   a. Approval of press release
   
   

The meeting was adjourned at 16:50 hrs.