COPENHAGEN (Reuters) – The Icelandic Financial Stability Committee has decided to increase the country’s countercyclical buffer rate to 2.5% from 2.0% when measured as a share of the domestic risk base, Iceland’s central bank said in a report on Wednesday.
Countercyclical capital buffers are key to ensure banking system resilience, it added.
“This increase is conducive to bolstering that resilience still further in the face of the risks that have accumulated and could materialise in the coming term,” the central bank said.
Iceland’s financial system is on solid footing, it added.
“The systemically important banks have delivered solid results and they have supported households and businesses. Their capital and liquidity positions are strong,” it said.
Iceland’s inflation will however be “stubbornly high” while debt service burdens will grow heavier, it added.
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(Reporting by Louise Breusch Rasmussen, editing by Terje Solsvik)