Greenland’s Systemic Risk Council Makes Key Recommendations for Island Nation’s Banks

Safeguarding Financial Stability in Greenland

The Systemic Risk Council has issued a crucial recommendation for Greenland’s banks, advocating for a countercyclical capital buffer rate of 0%. This decision comes after a comprehensive review of the island nation’s economic and financial situation.

Background and Context

Greenland has historically implemented Danish financial regulation, including EU directives, through tailored decrees. The decree governing the Systemic Risk Council took effect on January 1, 2016, alongside another decree regarding countercyclical capital buffers.

The Council’s Assessment

The Systemic Risk Council assessed Greenland’s countercyclical capital buffer rate using its general method, replicating data for the country whenever possible. The organization publishes a dataset following each quarterly meeting, providing insight into the information basis used to determine the buffer rate.

Key Recommendations

• A countercyclical capital buffer rate of 0%
• The Council’s assessment takes into account special circumstances relevant to Greenland
• Representatives from Greenland’s self-government participated in discussions to ensure consideration of the nation’s unique needs

Next Steps

The Council’s recommendation will be submitted to Greenland’s Minister for Industry, Business and Financial Affairs, which may influence the setting of capital buffer rates in the country.

Conclusion

By issuing this recommendation, the Systemic Risk Council aims to safeguard Greenland’s financial stability. The decision reflects a thorough understanding of the island nation’s economic and financial situation, ensuring that the country’s unique needs are taken into account.