Iceland's financial supervision: Simplification and future risks
Björk Sigurgísladóttir, Deputy Governor for Financial Supervision of the Central Bank of Iceland, reviewed 2025 supervisory actions and outlined future challenges. Speaking at the Annual Financial Supervision Day, she emphasized simplification efforts and consumer protection.
Supervision in 2025: Risk and reform
The Central Bank of Iceland's Deputy Governor, Björk Sigurgísladóttir, detailed the institution's risk-based supervisory activities in 2025, focusing on systemically important and riskier entities.
High priority was given to responsible business practices in pension insurance, leading to targeted reviews and regulatory amendments for enhanced consumer protection.
The Bank also published a report on payment services fraud, noting a significant increase in incidents and sums transferred, with over a billion Icelandic krónur lost between mid-2024 and mid-2025.
Initiatives to combat fraud are ongoing, though further improvements are needed, particularly in assessing transfer risks.
Additionally, a thematic check on international sanctions screening was completed, with a report published in December 2025.
Efforts to simplify the supervisory review and evaluation process (SREP) have also led to reduced additional capital requirements for Icelandic banks, reflecting improved risk management and regulatory adjustments.
Navigating regulatory complexity
The Central Bank of Iceland actively pursues simplification, both internally and through European initiatives with bodies like EBA and ESMA.
This has led to revoking fourteen supervisory guidelines and reducing reporting requirements, aiming for greater efficiency.
Deputy Governor Sigurgísladóttir stressed that simplification targets a more effective regulatory system, not weakened oversight or financial resilience.
Ahead lie challenges from continuous new regulatory instruments, with Iceland adopting over a hundred European provisions in five years.
Technological advances, especially cyber and IT risks, demand enhanced expertise and data analysis, with the Bank exploring responsible AI use.
Global conditions also pose indirect risks, requiring robust company resilience.
Simplification's tightrope walk
The speech reveals a central bank caught between the imperative to simplify and the relentless influx of new regulatory demands and technological risks.
While internal streamlining is commendable, the external environment of ever-increasing complexity presents a formidable challenge to maintaining effective oversight.
Ultimately, the emphasis on public trust underscores the high stakes involved in this ongoing balancing act.