Iceland: Financial Sector Assessment Program-Technical Note on Detailed Assessment on Basel Core Principles for Effective Banking Supervision

International Monetary Fund

No 2023/283, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper for Iceland presents Detailed Assessment on Basel Core Principles (BCP) for Effective Banking Supervision. The Ministry of Finance and Economic Affairs/parliamentary budgetary processes that is a legacy funding structure from the prior Fjármálaeftirlit hamper Central Bank of Iceland’s (CBI) ability to access funding for banking regulation and supervision. Key legislative amendments have been enacted in the banking laws to ensure Iceland’s compliance with the European Union’s regulatory framework for banking supervision. CBI implements a conservative approach to both capital and liquidity requirements, resulting in highly capitalized and adequate liquidity levels for banks. CBI/ Financial Supervisory Authority’s current complement of banking supervisors, including risk specialists is strong, however a few risk areas need augmentation. CBI’s banking supervisory and regulatory framework pertaining to Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) requirements is considered adequate. CBI has made great efforts to build up the area of expertise in AML/CFT to implement a risk based supervisory assessment model for banks and has carried out deep on-site inspections to assure itself of the effectiveness of bank’s risk management practices regarding compliance with applicable AML/CFT legislative and supervisory requirements.

Keywords: ASSESSMENT methodology; adequacy ASSESSMENT program; risk management; banking authority; Basel committee; Financial stability assessment; Credit risk; Market risk; Operational risk; Bank supervision; Global; Baltics (search for similar items in EconPapers)
Pages: 299
Date: 2023-07-28
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