Decisions on the application of the Central Bank's monetary policy instruments are taken by the Monetary Policy Committee. Decisions by the Monetary Policy Committee must be based on the Bank's price stability objective and a thorough assessment of the economic situation and outlook.

Members of the Monetary Policy Committee are the Governor, the Deputy Governor for Monetary Policy, the Deputy Governor for Financial Stability, and two experts in the fields of economics and monetary policy who are appointed by the Minister for a term of five years. The Governor chairs the Monetary Policy Committee, and the Deputy Governor for Monetary Policy serves as vice-chair.

The Monetary Policy Committee takes decisions on interest rates pursuant to Article 22 of the Central Bank Act, in order to enforce the Bank’s monetary policy. The Committee also takes decisions on transactions with credit undertakings other than those specified in Article 19, Paragraph 2 of the Act. Furthermore, the Committee takes decisions on minimum reserve requirements, foreign exchange market transactions, and securities transactions undertaken with the aim of achieving the Bank’s price stability objectives. 

Monetary Policy Committee Rules of Procedure

Decisions on the application of the Central Bank’s financial stability policy instruments are taken by the Financial Stability Committee. Decisions taken by the Financial Stability Committee must be based on the law and on a thorough assessment of the current situation of and outlook for the financial system.  In the Committee’s work, the Central Bank shall cooperate with other Governmental authorities, including the Ministry entrusted with matters relating to financial stability.

Members of the Financial Stability Committee are the Governor, the Deputy Governors, and three experts in financial market affairs or economics who shall be appointed by the Minister responsible for financial stability for a term of five years. The Permanent Secretary or an appointed official from the Ministry responsible for financial stability shall also participate in Committee meetings as a non-voting member with the right to address the meeting and present proposals. The composition of the Financial Stability Committee shall be such that the Committee collectively possesses sufficient expertise, qualifications, and experience to carry out the tasks entrusted to it. The Governor chairs the Financial Stability Committee, and the Deputy Governor for Financial Stability serves as vice-chair.

The tasks of the Financial Stability Committee are to:

• Assess the current situation of and outlook for the financial system, systemic risk, and financial stability.
• Discuss and define the actions deemed necessary at any given time in order to affect the financial system so as to strengthen and preserve financial stability, and to this end, direct comments to the appropriate Governmental authorities when warranted.
• Approve Governmental directives and take the decisions entrusted to the Committee by law.
• Decide which supervised entities, infrastructure, and markets shall be considered systemically important and of such a nature that their activities could affect financial stability.

Financial Stability Committee Rules of Procedure

The Financial Supervision committee shall take decisions entrusted to the Financial Supervisory Authority by law or Governmental directives. The Committee is authorised to entrust the Deputy Governor for Financial Supervision with taking non-major decisions.

Members of the Financial Supervision Committee are the Governor, the Deputy Governor for Financial Supervision, the Deputy Governor for Financial Stability, and three experts in financial market affairs who shall be appointed by the Minister responsible for the financial market for a term of five years. The composition of the Financial Supervision Committee shall be such that the Committee collectively possesses sufficient expertise, qualifications, and experience to carry out the tasks entrusted to it. The Governor chairs the Financial Supervision Committee, and the The Deputy Governor for Financial Supervision serves as vice-chair. When decisions are taken on the adoption of rules of procedure and on entrusting the Deputy Governor for Financial Supervision with taking non-major decisions and decisions concerning systemically important financial institutions’ equity, liquidity, and funding, the Governor takes a seat on the Financial Supervision Committee as chair, and the Deputy Governor for Financial Supervision serves as vice-chair.

Financial Supervision Committee Rules of Procedure

The Supervisory Board of the Central Bank shall be elected following Parliamentary elections. The Board comprises seven representatives and an equal number of alternates who are elected by proportional vote in Parliament. 

The mandate of the Supervisory Board remains in place until a new Board is elected.  If a principal member of the Supervisory Board vacates the position, an alternate shall assume this seat until Parliament has elected a new principal member for the remainder of the term of the Supervisory Board.

The Supervisory Board selects a chair and vice-chair from among its members.

The Governor attends meetings of the Supervisory Board, with the right to address the meeting, make proposals, and participate in discussions. The Governor shall leave the meeting, however, if the Supervisory Board so decides.

The Internal Auditor is entitled to attend Supervisory Board meetings and shall inform the Board regularly about his/her work.

The Supervisory Board monitors the Bank’s compliance with the statutory provisions applying to its activities.  Monitoring by the Supervisory Board does not include case handling or decisions on specific matters, however. In other respects, the Supervisory Board’s tasks are as follows:

• To endorse proposals by the Governor and Deputy Governors concerning the organisation of the Bank. To determine remuneration and terms of employment for members of the Monetary Policy Committee, Financial Stability Committee, and Financial Supervision Committee.
• To endorse the rules of procedure for the Monetary Policy Committee, Financial Stability Committee, and Financial Supervision Committee.  To oversee the Bank’s internal auditing and appoint the Internal Auditor. To endorse wage agreements with Bank employees, consider rules on their pension fund, and endorse the appointment of the Bank’s representative on the board of the pension fund when called for.
• To endorse the Central Bank’s proposal to the Minister on the rules for the Bank’s accounting and annual accounts.
• To endorse the Bank’s annual accounts.
• To endorse the Bank’s decision on capital adequacy criteria and disposition of profit.
• To endorse the Bank’s operating budget as presented by the Governor at the beginning of each operational year.
• To monitor the Bank’s assets and operations and endorse decisions on major investments in housing and other facilities for its activities.
• To endorse the Bank’s tariff.

The Supervisory Board shall be furnished with such information on the Central Bank of Iceland and companies owned by the Bank as is necessary for it to carry out its legally mandated role. The Governor shall inform the Supervisory Board of the main aspects of the Bank’s policy and of the rules it sets. 

On 24 March 2022, seven principal members and an equal number of alternates were elected by Parliament to the Supervisory Board of the Central Bank of Iceland.

Principal members: Arnar Bjarnason, Gylfi Magnússon, chairman, Sigríður Andersen, Þórunn Guðmundsdóttir, Kirstín Þ. Flygenring, Sigurjón Arnórsson, Þorsteinn Víglundsson.

Alternates: Aðalheiður Sigursveinsdóttir, Þórlindur Kjartansson, Kristín Thoroddsen, Hildur Traustadóttir, Vilhjálmur Þorsteinsson, Oddný Árnadóttir, Jarþrúður Ásmundsdóttir.

Supervisory Board Rules of Procedure