Central Bank and Financial Authority to Merge? Skip to content

Central Bank and Financial Authority to Merge?

Iceland’s government is currently discussing a possible merger between the Central Bank and the Financial Supervisory Authority (FME). Prime Minister Geir H. Haarde said it has not been decided whether a merger would require a new Central Bank board.

Chairman of the Central Bank board of directors Davíd Oddsson said in a speech yesterday, during an event organized by the Iceland Chamber of Commerce, that it had possibly been a mistake to separate the two authorities in 1998.

“It seems to me, as pointed out in [Oddson’s] speech, that the arrangement has not been successful enough and therefore it is natural to change it again,” Haarde told Fréttabladid. “It is not a criticism of the work of the Financial Supervisory Authority.”

Party Group Chairman for the Social Democrats, Lúdvík Bergsson, agrees. “I believe it should be considered if the conclusion of a merger would be a better system.”

Bergsson added that the Icelandic economy will not begin recovering until there is faith in the Central Bank. “For that to happen the government and the Central Bank have to cooperate.”

Bergsson believes it is important that a decision is made concerning these issues before the Icelandic króna is floated again following an anticipated loan package led by the International Monetary Fund (IMF). The IMF will make a decision on the loan today.

However, Prime Minister Haarde believes it is unrealistic that this change can happen before the króna is floated.

Copyright of photo of Prime Minister Haarde: Icelandic Photo Agency.

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