Amended Rules on Current Accounts with the Central Bank of Iceland
The Rules on Current Accounts in the Central Bank of Iceland, no. 18/2022, have been amended and reissued under a new title: Rules on Current Accounts and Non-Interest-Bearing Accounts with the Central Bank of Iceland, no. 1644/2022. The amendments centre mainly on the authorisation for credit institutions to open non-interest-bearing accounts with the Central Bank. In addition, provisions on closure of current accounts with the Bank have been amended, and a few non-substantive changes in wording have been made in order to harmonise the text with other rules applying to transactions by the Central Bank of Iceland.
New provision on non-interest-bearing accounts
The new Rules on Current Accounts contain a separate provision on the establishment of non-interest-bearing accounts with the Central Bank. The establishment of such accounts is generally offered only to credit institutions and branches of comparable EEA credit institutions that, under the Rules, are not authorised to open current accounts with the Bank. The establishment and use of non-interest-bearing accounts with the Central Bank of Iceland is subject to the requirement that such establishment and use comply with the objectives and tasks of the Central Bank, and that the Bank deem such accounts to be necessary for the financial institution’s activities. Therefore, the establishment of a non-interest-bearing account is subject largely to the same requirements as apply to the establishment and use of current accounts. However, it is not required that the holder of a non-interest-bearing account be an active participant in the transmission of the Central Bank’s monetary policy, nor must the account holder satisfy requirements concerning the maximum proportion of customer deposits that may be held on account with the Bank. Furthermore, the Bank is authorised to set further conditions pertaining to the establishment and use of non-interest-bearing accounts, such as stipulating a maximum balance that may be held in them.
New provision on establishment of a non-interest-bearing account following current account closure
In connection with the above-specified amendment, a new provision has been added concerning the closure of current accounts with the Central Bank. This amendment authorises the Central Bank to transfer the balance on a financial institution’s current account to a non-interest-bearing account in that institution’s name when its current account is closed; for instance, in cases when the conditions for the establishment and use of a current account are not satisfied.
No. 1/2023
4 January 2023