Offshore króna assets

Since the capital controls were introduced, offshore króna assets and other króna-denominated assets have been subject to restrictions laid down in the Foreign Exchange Act and the Rules on Foreign Exchange. The principal objective of the Act on the Treatment of Króna-Denominated Assets Subject to Special Restrictions, no. 37/2016, was to segregate offshore krónur in a secure manner so that it would be possible to take the next step towards lifting the capital controls and re-establishing unrestricted cross-border transactions with krónur without jeopardising financial stability or monetary or exchange rate stability. When Act no. 37/2016 entered into force, it was foreseen that the restrictions it provided for would be temporary measures and that the authorities would once again aim to lift the capital controls on offshore króna assets once resident entities’ asset portfolios had been better rebalanced.

Amendments to the Act on the Treatment of Króna-Denominated Assets Subject to Special Restrictions, no. 37/2016, entered into force on 5 March 2019, with the passage of Act no. 14/2019. The purpose of the amendments was to expand offshore króna owners’ authorisations to withdraw funds from accounts subject to special restrictions without undermining the efficacy of the special reserve requirement on capital inflows. The amendments entailed expanded authorisations for withdrawals from account subject to special restrictions, so that all offshore króna holders would be given the chance to release their offshore króna assets.