Financial Crime World

Greenland’s Banks Face Regulatory Requirements to Mitigate Systemic Risk

The Systemic Risk Council, responsible for monitoring financial risks in Greenland, has made recommendations and warnings about the country’s economic circumstances. Representatives from Greenlandic authorities have been invited to participate in discussions as observers.

Identifying and Monitoring Systemic Financial Risks

Under the council’s purview is identifying and monitoring systemic financial risks in Greenland, with recommendations on macroprudential initiatives aimed at banks operating in the country. The council makes these recommendations to the Minister for Industry, Business and Financial Affairs, who sets capital buffer rates in Greenland.

Implementing Danish Financial Regulations

Greenland has implemented Danish financial regulations, including EU directives, through decrees that take into account special circumstances unique to the country. Two key decrees came into effect on January 1, 2016: one governing the Systemic Risk Council’s rules and another determining countercyclical capital buffers for banks in Greenland.

Recent Recommendations

Recently, the council recommended maintaining a countercyclical capital buffer rate of zero percent for Greenland, following discussion about the country’s economic situation. Representatives from the Greenlandic self-government participated in the meeting.

Assessing Countercyclical Capital Buffer Rate

The Systemic Risk Council assesses the level of the countercyclical capital buffer rate in Greenland using its general method, replicating data to the extent possible. The council publishes a dataset after each quarterly meeting containing information used for assessing the buffer rate.

  • The council’s recommendations are made to the Minister for Industry, Business and Financial Affairs.
  • The minister sets capital buffer rates in Greenland based on the council’s recommendations.
  • The council assesses the level of the countercyclical capital buffer rate using its general method and publishes a dataset after each quarterly meeting.