seðlabanda

Seðlabanda is a term of Icelandic origin that translates to "central bank." It refers to the national financial institution responsible for managing a country's currency, money supply, and interest rates. In Iceland, the Seðlabanki Íslands is the central bank, established in 1961. Its primary objectives include maintaining price stability, ensuring the soundness and efficiency of the financial system, and promoting sustainable economic growth.

The Seðlabanki Íslands plays a crucial role in implementing monetary policy. It achieves this by setting the policy interest rate, which influences borrowing costs throughout the economy. By adjusting this rate, the bank aims to control inflation and stimulate or cool down economic activity as needed. Additionally, the central bank is responsible for issuing banknotes and coins, managing the country's foreign exchange reserves, and acting as a lender of last resort to financial institutions.

Beyond its monetary functions, the Seðlabanki Íslands supervises and regulates the Icelandic financial sector to prevent systemic risk and protect depositors. It conducts economic research and provides analysis to inform policy decisions and public understanding of the economy. The bank's independence from political influence is considered vital for its effectiveness in achieving its mandates.