Iceland’s Banking Industry Faces Tighter Regulations
The Central Bank of Iceland has announced its plans to closely monitor the compliance of regulated financial institutions with laws, regulations, and rules governing their activities. The move aims to ensure that these institutions operate in a sound and proper manner.
Scope of Regulation
Under the supervision of the Central Bank, various types of financial undertakings are subject to regulation, including:
- Commercial banks
- Savings banks
- Credit undertakings
- Investment firms
- And more
Each type of institution is governed by specific legislation, with some sectors facing stricter regulations than others.
Supervision and Oversight
In addition to supervising individual institutions, the Central Bank also oversees the securities market, ensuring that:
- Acquisitions are conducted in a fair and transparent manner
- Investment services are provided in accordance with relevant laws and regulations
- Short selling is carried out in compliance with market rules
- Derivatives trading is done so as to minimize risk and maintain stability
The bank is also responsible for monitoring:
- Insurance contracts
- Distance selling of financial services
- Key information documents for packaged retail and insurance-based investment products
Winding-Up of Financial Undertakings
Furthermore, the Central Bank has special supervision over the winding-up of financial undertakings, managed by winding-up boards, regardless of whether the undertaking holds an operating licence or not.
The bank also monitors:
- The activities of domestic entities abroad
- Foreign entities in Iceland, subject to the provisions of special laws and international agreements
Goals and Benefits
The move aims to enhance consumer protection, prevent financial risks, and maintain stability within the banking industry. With stricter regulations in place, Iceland’s financial sector is expected to become more robust and resilient, providing a safer environment for both domestic and foreign investors.
By implementing these measures, the Central Bank of Iceland is working towards creating a more stable and trustworthy financial system, ultimately benefiting both individuals and businesses operating within the country.