Amendments to Central Bank of Iceland Rules on Foreign Exchange and exemption lists
Amendments have been made to the Central Bank of Iceland exemption lists, which are published on the Bank’s website according to Articles 2 and 3 of the Rules on Foreign Exchange, no. 565/2014; cf. Article 13(b), Paragraph 4 of the Foreign Exchange Act. The exemption lists now include only Treasury bills and one Treasury bond, RIKB 15 0408. This change reduces the number of financial instruments on the exemption lists.
Cross-border movement of capital deriving from transactions with the types of financial instrument specified on the current lists are still exempt from the restrictions set forth in the Foreign Exchange Act, subject to the fulfilment of the conditions further described in Articles 2 and 3 of the Rules on Foreign Exchange. The Central Bank reserves the right to revise the current exemption lists in view of the conditions prevailing at any given time.
Concurrent with the changes in the Central Bank’s exemption lists, amendments have been made to the Rules on Foreign Exchange, no. 565/2014. Owners of bonds no longer on the exemption lists are permitted to sell their financial instruments. On the other hand, they are not permitted to invest in instruments other than those exempted according to the decision of the Central Bank of Iceland.
Króna-denominated assets that are often referred to as offshore krónur and are restricted by the capital controls currently amount to nearly 15% of GDP. The purpose of the above-described amendments is to prepare for further steps towards liberalisation of the controls. Among other things, this entails that owners of these ISK assets will be offered investment options that greatly reduce the likelihood of instability when the controls are lifted. In part, the timing of the amendments to the exemption lists announced today aims to preserve the efficient functioning of the bond market.
The Rules amending the Rules on Foreign Exchange, no. 565/2014, can be found here.
Further information can be obtained from Már Guðmundsson, Governor of the Central Bank of Iceland, at tel: +354 569 9615.
6 March 2015