The Central Bank of Iceland ( is, Seðlabanki Íslands) is the

central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...

reserve bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...

Iceland Iceland ( is, Ísland; ) is a Nordic island country in the North Atlantic Ocean and in the Arctic Ocean. Iceland is the most sparsely populated country in Europe. Iceland's capital and largest city is Reykjavík, which (along with its s ...

. It has served in this capacity since 1961, when it was created by an act of the

Alþingi The Alþingi (''general meeting'' in Icelandic, , anglicised as ' or ') is the supreme national parliament of Iceland. It is one of the oldest surviving parliaments in the world. The Althing was founded in 930 at ("thing fields" or "assembly ...

out of the central banking department of

Landsbanki Íslands Landsbanki (literally "national bank"), also commonly known as Landsbankinn (literally "the national bank") which is now the name of the current rebuilt bank (here called "New Landsbanki"), was one of the largest Icelandic commercial banks that f ...

, which had the sole right of note issuance since 1927 and had conducted only limited

monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often a ...

. Seðlabanki Íslands 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. 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 which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit. It can also refer to a bank, or a division of a large bank, which deals with cor ...

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 mar ...

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.

Governors

Monetary reform

In 2015, after the

2008–2011 Icelandic financial crisis The Icelandic financial crisis was a major economic and political event in Iceland that involved the default of all three of the country's major privately owned commercial banks in late 2008, following their difficulties in refinancing their ...

, 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 of an economic or monetary region,Such as the Eurozone or ECCAS is increased. In most modern economies, money creation is controlled by the central bank ...

and to end to

fractional-reserve banking Fractional-reserve banking is the system of banking operating in almost all countries worldwide, under which banks that take deposits from the public are required to hold a proportion of their deposit liabilities in liquid assets as a reserve, ...

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. AFP has regional headquarters in Nicosia, Montevideo, Hong Kong and Washington, D.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 national British daily broadsheet newspaper published in London by Telegraph Media Group and distributed across the United Kingdom and internationally. It was fo ...

'', 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.

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

Governors

Monetary reform

See also

References

External links