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The Central Bank of Iceland is the central bank or reserve bank of Iceland. It is owned by the Icelandic government, and is administered by a governor and a seven-member supervisory board, elected by the country's parliament following each general election.[2] It has the sole right to issue notes and coins of Icelandic krónur and to manage the state's foreign currency reserves.
History
The Central Bank of Iceland was created in 1961 by an act of the Alþingi out of the central banking department of Landsbanki Íslands, which had been the island's sole bank of issue since 1927 and had conducted only limited monetary policy.
The Central Bank Act of 1986 eliminated the ability of the Central Bank to regulate the interest rates of commercial banks and savings banks.
Though nominally independent, the Central Bank of Iceland was historically expected to follow the lead of the central government. In 2001, however, a floating exchange rate policy was introduced and since then the Central Bank has been empowered to adopt an inflation target and manage monetary policy so as to achieve price stability independent of the policies of the central government.