Iceland : Financial Sector Assessment Program-Technical Note on Stress Testing and Systemic Risk Analysis
This technical note on Iceland focuses on Stress Testing and Systemic Risk Analysis. The Financial Sector Assessment Program took place against the background of a strengthened financial sector in Iceland amid heightened uncertainty in the global economy. The Icelandic financial landscape has undergone significant structural transformation since the global financial crisis with a contracted banking sector. The banking sector is sound, but foreign exchange (FX) funding remains a vulnerability. The scenario-based bank solvency stress test confirmed the sector's resilience to severe but plausible macro-financial shocks, with gross domestic product influence similar to the Global Financial Crisis. The adverse scenario confirms banks' resilience to severe yet plausible adverse shocks. Although the adverse scenario produced a significant impact on bank capital ratios, no bank saw its capital ratios falling below the hurdle rates, owing to the high initial capital positions and adequate pre-provision income. The Liquidity Coverage Ratio-based stress test suggests that although the banking system on aggregate is broadly resilient to adverse liquidity conditions, it is not immune to additional liquidity outflows from pension and nonresident FX funding
Year of publication: |
2023
|
---|---|
Institutions: | International Monetary Fund / Monetary and Capital Markets Department |
Publisher: |
Washington, D.C : International Monetary Fund |
Subject: | Island | Iceland | Systemrisiko | Systemic risk | Finanzsektor | Financial sector | Stresstest | Stress test | Bankenkrise | Banking crisis | Bankrisiko | Bank risk | Risikomanagement | Risk management |
Saved in:
freely available
Saved in favorites
Similar items by subject
-
Stress testing and financial instability
Ionescu, Cristian, (2014)
-
Cyber risk surveillance : a case study of Singapore
Goh, Joseph, (2020)
-
Models of financial stability and their application in stress tests
Aymanns, Christoph, (2017)
- More ...
Similar items by person