seðlabankans

The Central Bank of Iceland, known in Icelandic as Seðlabanki Íslands, is the central bank and monetary authority of Iceland. It is responsible for monetary policy, financial stability, the issuance of the Icelandic currency (the króna), and the operation of the payments system. The bank is an independent public institution established under Icelandic law and works with the government and Parliament within the framework of macroeconomic policy.

History and mandate: The Seðlabankinn was established in 1961 to consolidate Iceland’s central banking functions. Its mandate is to maintain price stability and contribute to the stability of the financial system by providing essential monetary and payment services, managing foreign exchange reserves, and acting as lender of last resort when needed.

Functions: The bank sets monetary policy through a policy rate determined by a committee, monitors inflation, and uses liquidity facilities and other instruments to influence credit conditions. It oversees the payments system in coordination with other authorities and holds accounts for the state.

Currency and supervision: The bank issues banknotes and coins and manages foreign exchange operations and reserves to support policy goals and financial stability. Iceland’s Financial Supervisory Authority oversees banks, insurance, and pensions, with the central bank coordinating on macroprudential matters.

Governance and accountability: The bank is headed by a governor and governed by a policy committee. It publishes regular reports, including monetary policy reports and financial stability assessments, to inform the public and policymakers.

Notable events: During the 2008 financial crisis, the bank implemented measures to stabilize the króna and the financial system, supported by international partners and national reforms.