Retrospective on Kristin (Giglia) Deliso,“The Failure and Reform of Iceland’s Financial Regulatory System” from Post-Crash Iceland: Opportunity, Risk, and Reform PerspecƟves on Business and Economics, Volume 29, 2011 KrisƟn Deliso ’11 is now Associate at Sullivan & Cromwell LLP. Have the supervisory systems taken up their responsibilities since the ϐinancial crisis in Iceland? In response to the financial crisis of 2008, the Icelandic supervisory systems have focused on improving their framework, economic policy, and supervisory management. In 2012, Iceland published a framework for financial stability, which proposed “providing a common plaƞorm for the operaƟons of the CBI and the FME” (Bingham et al., 2012) and “bringing all financial sector legislaƟon…under a single ministry” (Bingham et al., 2012). Doing so would provide the financial insƟtuƟons with stronger accountability and beƩer leadership regarding financial regulaƟon, which in turn would prevent a repeat of unregulated bank growth. In 2014, the Financial Stability Council was established to be the common plaƞorm spoken of in the report that was necessary to strengthen economic governance. Its duƟes currently include formulaƟng stability policies, monitoring imbalances and risk systems, and assessing macroprudenƟal tools. AddiƟonally, the Central Bank of Iceland (CBI) and the Financial Supervisory Authority (FME) merged in 2020 into a single body with combined powers (Government of Iceland, n.d.). Has Iceland’s ϐinancial reform been adequate in preventing another collapse? According to the Framework for Financial Stability in Iceland, “The financial market situaƟon has changed radically since 2008. The assets of the financial system as a whole are less than half (49% according to CBI staƟsƟcs) of what they were at the height of the banking boom in the first half of 2008” (Bingham et al., 2012). This can be aƩributed to the improved responsibility of the financial enƟƟes as well as the three new banks that replaced Landsbanki, Kaupthing, and Glitner. Unlike the “old” banks that were primarily focused on the internaƟonal markets, the “new” banks Arion Bank, Landsbankinn, and Íslandsbanki are more focused on domesƟc markets. The tourism industry also rose in success aŌer the crisis of 2008 and provided Iceland with a stable, resilient source of economic income for the recovering country (Fjeldsted et al., 2021). In conjuncƟon, leaders also placed heavy restricƟons on foreign exchanges iniƟally aŌer the collapse. However, most have been removed as the years have progressed. In other words, “with capital controls removed, the financial sector has regained stability” (The Heritage FoundaƟon). References Bingham, G., Sigurðsson, J., & Jännäri, K. (2012, October) Framework for financial stability in Iceland: RecommendaƟons of the group of three to the Minister of Industries and InnovaƟon and the Minister of Finance and Economic Affairs. Ministry of Industries and InnovaƟon. Fjeldsted, A.S., Guojonsson, K.S., & Bartolozzi, S. (2020). The Icelandic economy: Current state, recent developments and future outlook. (23rd ediƟon). Iceland Chamber of Commerce. Government of Iceland. (n.d.). Economic affairs and public finances. www.government.is/topics/ economic-affairs-and-public-finances/. The Heritage FoundaƟon. (2021). Iceland economy: PopulaƟon, GDP, inflaƟon, business, trade, FDI, corrupƟon. www.heritage.org/index/ country/iceland. RetrospecƟve by Sidney Jankanish ’23, PoliƟcal Science and InternaƟonal RelaƟons Martindale Retrospectives 2 November 2021
RkJQdWJsaXNoZXIy MTA0OTQ5OA==