The Central Bank of Iceland (, ) is the central bank or reserve bank of Iceland. 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 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 out of the central banking department of Landsbanki Íslands, which had been the island's sole bank of issue since 1927 and had conducted only limited monetary policy.
The Central Bank Act of 1986 eliminated the ability of the Central Bank to regulate the interest rates of commercial banks 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 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 government of Iceland considered "a revolutionary monetary proposal" to abolish private money creation and to end to fractional-reserve banking.Agence France-Presse, "Iceland looks at ending boom and bust with radical money plan", The Daily Telegraph, 31 March 2015 (page visited on 13 April 2018). Similar to the Swiss Sovereign Money Initiative, this plan would remove the power of money creation from the commercial banks 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.
On june 2025 it joined the Eurosystem’s TARGET Instant Payment Settlement (TIPS) system, after an agreement with the European Central Bank.
Leadership In its early days, the bank was governed by a system of 3 directors, similar to how the National Bank of Denmark is managed. NameMandatNameMandatNameMandatJóhannes Nordal1961–1993Vilhjálmur Þór1961–1964Jón G. Maríasson1961–1967Jón Sigurðsson1993–1994Sigtryggur Klemensson1966–1971Davíð Ólafsson1967–1986Steingrímur Hermannsson1994–1998Svanbjörn Frímannsson1971–1973Geir Hallgrímsson1986–1990Finnur Ingólfsson2000–2002Guðmundur Hjartarson1974–1984Birgir Ísleifur1991–2005Ingimundur Friðriksson2002–2003Tómas Árnason1985–1993Davíð Oddsson2005–2009Jón Sigurðsson2003–2006Eiríkur Guðnason1994–2009Ingimundur Friðriksson2006–2009
Following the 2008 crisis, the directors' system was abolished and Norwegian Svein Harald Øygard was appointed interim governor of the bank from February to August 2009.Bankastjórn frá upphafi
List of governors N.ºNameMandat1Már GuðmundssonPrime Minister appoints new Governor and Deputy Governor of the Central Bank of Iceland20 August 2009–31 July 20192Ásgeir JónssonSince 1 July 2019
See also 2008–2011 Icelandic financial crisis Economy of Iceland Financial Supervisory Authority (Iceland) Icelandic króna List of central banks List of financial supervisory authorities by country
References
External links
Official website Official website