Central Bank of Iceland
Encyclopedia
The Central Bank of Iceland is the central bank
or reserve bank
of Iceland
. It has served in this capacity since 1961, when it was created by an act of the Alþingi out of the central banking department of Landsbanki Íslands, which had had the sole right of note issuance since 1927 and had conducted only limited monetary policy
.
Seðlabanki Íslands is owned by the Icelandic government, administered by a three-member board of governors appointed by the Prime Minister
to seven-year terms and a seven-member supervisory board. 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
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 rates 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.
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
or reserve bank
Reserve currency
A reserve currency, or anchor currency, is a currency that is held in significant quantities by many governments and institutions as part of their foreign exchange reserves...
of Iceland
Iceland
Iceland , described as the Republic of Iceland, is a Nordic and European island country in the North Atlantic Ocean, on the Mid-Atlantic Ridge. Iceland also refers to the main island of the country, which contains almost all the population and almost all the land area. The country has a population...
. It has served in this capacity since 1961, when it was created by an act of the Alþingi out of the central banking department of Landsbanki Íslands, which had had the sole right of note issuance since 1927 and had conducted only limited monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
.
Seðlabanki Íslands is owned by the Icelandic government, administered by a three-member board of governors appointed by the Prime Minister
Prime Minister of Iceland
The Prime Minister of Iceland is Iceland's head of government. The prime minister is appointed formally by the President and exercises executive authority along with the cabinet subject to parliamentary support....
to seven-year terms and a seven-member supervisory board. 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
Commercial bank
After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...
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 rates 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.
See also
- 2008–2011 Icelandic financial crisis
- Economy of IcelandEconomy of IcelandThe economy of Iceland is small and subject to high volatility. In 2007, gross domestic product was US$12.144bn in total and $38,400 per capita, based on purchasing power parity estimates...
- Icelandic krónaIcelandic krónaThe króna is the currency of Iceland. The króna is technically subdivided into 100 aurar , but in practice this subdivision is no longer used....
- Icelandic Financial Supervisory Authority
- GlitnirGlitnir (bank)Glitnir was an international Icelandic bank. It was created by the state-directed merger of the country's three privately held banks - Alþýðubanki , Verzlunarbanki and Iðnaðarbanki - and one failing publicly held bank - Útvegsbanki - to form Íslandsbanki in 1990...
- Kaupthing BankKaupthing BankKaupthing Bank was an international Icelandic bank, headquartered in Reykjavík, Iceland. It was formed by the merger of Kaupthing and Búnaðarbanki Íslands in 2003 and was the largest bank in Iceland....
- LandsbankiLandsbankiLandsbanki, also commonly known as Landsbankinn in Iceland, is a private Icelandic bank with international operations...