Minutes of the meeting of the Financial Stability Council on April 1st 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; Harpa Jónsdóttir, Director, Financial Stability Department, Central Bank of Iceland; Jón Þór Sturluson, Deputy Director General of the Financial Supervisory Authority; and Tinna Finnbogadóttir, Secretary to the Financial Stability Council.

The meeting was called to order at 11:07 hrs. on 1 April 2019

1. Presentation by chair of the Systemic Risk Committee on key aspects of the Committee’s report
   a. The chair of the Systemic Risk Committee informed the Council that the findings and conclusion of the Committee’s report had become less relevant in the time that had passed since the report was finalised, especially considering that risk associated with WOW Air had realised. The committee’s report had found that risk in the financial system was still moderate but there was higher probability of increased risk. The chair of the Committee presented the effect of the suspension of operations of WOW Air and the lack of capelin quota on the Central Bank’s economic forecast. Despite recent events, the exchange rate of the króna has remained relatively stable.
2. Nordic-Baltic crisis simulation in January 2019
   a. The Deputy Director General of the Financial Supervisory Authority presented the outcome of a cross border crisis simulation organised by the Nordic Baltic Stability Group which the Financial Supervisory Authority, the Central Bank and the Ministry of Finance and Economic Affairs participated in in January of this year. The institutions are independently and collectively with the advisors who organized the simulation and the surveillance authorities of other countries preparing summaries and take aways from the simulation.
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 at 1,75%.
4. Annual revision of the capital buffer for systemically important financial institutions
   a. The Council approved a recommendation to the Financial Supervisory Authority to keep the capital buffer for systemically important financial institutions unchanged at 2,00%.
5. Other business. a. Approval of press release

The meeting was adjourned at 11:50 hrs.