The Central Bank of Iceland (, ) is the

central bank A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the mo ...

reserve bank A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the mone ...

Iceland Iceland is a Nordic countries, Nordic island country between the Atlantic Ocean, North Atlantic and Arctic Oceans, on the Mid-Atlantic Ridge between North America and Europe. It is culturally and politically linked with Europe and is the regi ...

. It is owned by the Icelandic government, and is administered by a governor and a seven-member supervisory board, elected by the country's parliament following each general election. It has the sole right to issue notes and coins of

Icelandic krónur Icelandic refers to anything of, from, or related to Iceland and may refer to: *Icelandic people *Icelandic language *Icelandic orthography *Icelandic cuisine The cuisine of Iceland has a long history. Important parts of Iceland, Icelandic cui ...

and to manage the state's foreign currency reserves.

History

The Central Bank of Iceland was created in 1961 by an act of the

Alþingi The (; ), anglicised as Althingi or Althing, is the supreme national parliament of Iceland. It is the oldest surviving parliament in the world. The Althing was founded in 930 at (' thing fields' or 'assembly fields'), about east of what la ...

out of the central banking department of

Landsbanki Íslands Landsbanki (, ), also commonly known as Landsbankinn (, ) was one of the largest Icelandic commercial banks; it failed as part of the 2008–2011 Icelandic financial crisis when its subsidiary sparked the Icesave dispute. On October 7, 2008, th ...

, which had been the island's sole

bank of issue A bank of issue, also referred to as a note-issuing bank or issuing authority, is a financial institution that issues banknotes. The short-lived Stockholms Banco (1657-1667) printed notes from 1661 onwards and is generally viewed as the first-ev ...

since 1927 and had conducted only limited

monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability (normally interpreted as a low and stable rat ...

. The Central Bank Act of 1986 eliminated the ability of the Central Bank to regulate the interest rates of

commercial bank A commercial bank is a financial institution that accepts deposits from the public and gives loans for the purposes of consumption and investment to make a profit. It can also refer to a bank or a division of a larger bank that deals with whol ...

s and savings banks. Though nominally independent, the Central Bank of Iceland was historically expected to follow the lead of the central government. In 2001, however, a

floating exchange rate In macroeconomics and economic policy, a floating exchange rate (also known as a fluctuating or flexible exchange rate) is a type of exchange rate regime in which a currency's value is allowed to fluctuate in response to foreign exchange market ...

policy was introduced and since then the Central Bank has been empowered to adopt an inflation target and manage monetary policy so as to achieve price stability independent of the policies of the central government. In 2015, after the

2008–2011 Icelandic financial crisis The Icelandic financial crisis was a major financial crisis, economic and political event in Iceland between 2008 and 2010. It involved the default (finance), default of all three of the country's major privately owned commercial banks in late 2 ...

, the government of Iceland considered "a revolutionary monetary proposal" to abolish private

money creation Money creation, or money issuance, is the process by which the money supply of a country, or an economic or monetary region,Such as the Eurozone or ECCAS is increased. In most modern economies, money is created by both central banks and comm ...

and to end to

fractional-reserve banking Fractional-reserve banking is the system of banking in all countries worldwide, under which banks that take deposits from the public keep only part of their deposit liabilities in liquid assets as a reserve, typically lending the remainder to ...

Agence France-Presse Agence France-Presse (; AFP) is a French international news agency headquartered in Paris, France. Founded in 1835 as Havas, it is the world's oldest news agency. With 2,400 employees of 100 nationalities, AFP has an editorial presence in 260 c ...

"Iceland looks at ending boom and bust with radical money plan"
''

The Daily Telegraph ''The Daily Telegraph'', known online and elsewhere as ''The Telegraph'', is a British daily broadsheet conservative newspaper published in London by Telegraph Media Group and distributed in the United Kingdom and internationally. It was found ...

'', 31 March 2015 (page visited on 13 April 2018). Similar to the Swiss Sovereign Money Initiative, this plan would remove the power of

from the

s and give it to the Central Bank of Iceland. The option was not implemented. On , the Central Bank of Iceland absorbed the Financial Supervisory Authority, previously an independent institution established in 1999.

Leadership

References

External links

Official website

Official website
{{authority control

Banks of Iceland Banking in Iceland Banks established in 1961 1961 establishments in Iceland Government agencies of Iceland

History

Leadership

See also

References

External links