Iceland
Central Bank of Iceland gains new powers as more controls lift
Central bank given new powers over information gathering as legislation establishes next phase of capital control liberalisation
Central Bank of Iceland changes course with 50bp cut
Reversal of tightening cycle reflects concern inflation is not rising as expected, in part because of the strength of the króna; growth still forecast to continue above trend
Capital outflows look manageable as Iceland moves to lift controls – central bank
A “stress test” of potential outflows implies the Icelandic financial system and central bank reserves will cope when capital controls are lifted; the government bill prepares to release funds
Icelandic paper finds ‘striking’ ties between financial cycle and real economy
Authors identify strong financial cycle linked to global factors, which impacts macro variables including consumption and government spending; paper suggests range of policy responses
‘Still some flaws’ in transmission mechanism – Icelandic report
Monetary policy report says capital flow measures have not yet had as much of an impact as intended, with the yield curve stubbornly staying flat
Iceland’s new macroeconomic council faces up to wage challenges
Collaboration between government, central bank and labour market groups aims to bring bouts of rapid wage growth under control and better co-ordinate policy
Iceland expands policy framework with capital flow tool
Central bank embraces idea of monetary policy dilemma, not trilemma, imposing reserve requirements on certain types of capital flows into the economy
Iceland prepares for offshore króna auction
Date set for major step towards lifting capital controls, as holders of offshore króna are offered chance to swap currency, albeit at punitive rates
People: Lithuania reappoints governor; Carstens retains BIS posts
Vitas Vasiliauskas handed second five-year term; Carstens will continue to chair the BIS’s global economy meeting and economic consultative committee; ex-Iceland governor to run for president
EBA publishes first complete list of European O-SIIs
European Banking Authority publishes first full list of other systemically important institutions in Europe; some national supervisors make more use of discretion than others
Conditions for lifting capital controls ‘could hardly be better' – Guðmundsson
Central Bank of Iceland governor says it is important to press ahead with liberalisation while the economy is strong and financial system stable, in latest financial stability report
Capital flow measures needed before offshore krona auction, says Guðmundsson
If the currency auction goes to plan, inward flows could strengthen and the Central Bank of Iceland needs the tools to resist them, its governor says
Inflation and unemployment affect wage rigidity, Icelandic authors find
Research challenges New Keynesian assumption that timings of wage changes are exogenous, showing level of inflation and unemployment also matter
Capital controls essential for small open economies, Guðmundsson says
Small open economies cannot conduct fully independent monetary policy if they are unwilling to use capital controls at least some of the time, Icelandic governor says
Central Bank of Iceland under scrutiny on crisis response
Supervisory board to investigate complaints over the handling of breaches in capital controls and legal uncertainty surrounding the holding company established by the central bank
Improved inflation outlook gives Icelandic central bank room for manoeuvre
Shallower path for near-term inflation allows central bank to make smaller rate hike than planned, but the longer-term picture still shows inflation overshooting the target
Central Bank of Iceland approves failed bank plans
Central Bank of Iceland approves ‘composition agreements’ by failed banks, offering them the opportunity to duck a heavy stability tax
Central Bank of Iceland delays report as tensions over failed banks rise
Central bank postpones launch of financial stability report at last minute, citing the need to wait for new information; governor responds to lobby group calling for heavier tax on failed banks
Iceland hikes again amid inflation shock
Large wage increases force central bank to reassess its inflation forecast and hike rates for a second meeting in a row, with more likely to follow
Iceland’s Guðmundsson sees role for IMF as arbiter of capital flows
Small open economies are being forced to take sub-optimal actions to defend themselves from capital flows, and while global ‘rules of the game’ are far off, IMF monitoring could be a first step
Icelandic paper looks for early-warning signals across past crises
Working paper identifies six clusters of financial crises in the country since 1875; finds macroeconomic variables give a ‘more robust warning signal’ than financial alternatives
Iceland offers pension funds relief from capital controls
Pension funds will have access to a limited amount of foreign currency in an effort to smooth the transition as controls are lifted
Iceland’s Guðmundsson plans post-capital controls monetary redesign
‘Inflation targeting plus plus’ would help the small, open economy to pursue independent monetary policy, insulated from violent capital flows, the Icelandic governor tells Central Banking
Iceland raises rates by 50bp and warns more will follow
Central bank says it will take ‘appropriate countervailing measures’ if the increase in government revenues from failed bank asset tax is used to stimulate the economy