Iceland: Financial System Stability Assessment

Iceland has made solid progress since the 2008 crisis and the last FSAP update in restructuring banks and implementing important financial sector reforms. It has transposed many EU Directives and Regulations into national law, improving the regulatory, supervisory, and crisis management frameworks. Despite global headwinds, Iceland is exiting the pandemic with strong economic growth and highly capitalized banks. Rising inflation has prompted appropriate policy rate hikes, and macroprudential policies related to real estate exposures have been tightened. Payment systems are dependent on international connectivity of debit and credit card providers.