At the same time as the renewal of core financial market infrastructure is underway, a great deal is happening in the field of payment intermediation, both internationally and here in Iceland, owing to new technological solutions and changes in the regulatory framework that will stimulate competition in this area. Among the topics under consideration is the new EU Payment Services Directive, which is to be implemented in Iceland in the near future. In addition, virtual currencies have come into use as a medium of payment, both nationally and across borders, and there is a great deal of discussion at present of the pros and cons of central bank issuance of electronic money. In view of the many changes currently underway in the field of payment intermediation, the Central Bank has previously discussed the necessity of establishing a permanent information and cooperation forum representing all stakeholders in this area. In the near future, the Bank will take the initiative on this, with the aim of establishing the forum before the end of this year. Apart from its Financial Market Infrastructure report, issued in June, the Bank is planning to publish two reports on these topics quite soon. One is a report on retail payment intermediation from the standpoint of preparedness and financial stability, which focuses on debit card use, real-time settlement, and the importance of effective electronic payment intermediation in Iceland, both in  7  favourable and unfavourable conditions. The other report focuses on the possible issuance of electronic krónur.

To a degree, the authorities have responded to this risk: last year the Financial Supervisory Authority imposed a ceiling on residential loan-to-value ratios, following analysis and discussion within the Systemic Risk Committee, which works for the Financial Stability Council, and upon receiving an opinion from the Council. Developments in the real estate market will continue to be monitored closely in this respect, and the possibility of applying additional macroprudential tools will be considered. Another risk factor that the Financial Stability Council has identified is uncertainty about future developments in the tourism sector and the potential impact that a setback in the industry would have on the position of the banking system. At the end of 2017, lending to the tourism sector accounted for 9% of the large commercial banks’ total lending, but because growth in tourism has eased recently, this ratio has held broadly steady. The Central Bank of Iceland conducts an annual stress test in consultation with the Financial Supervisory Authority, in which it examines the impact of macroeconomic scenarios on the commercial banks’ resilience. The results are published in the autumn issue of the Bank’s Financial Stability report. The last stress test assumed that there would be a recession in trading partner countries, plus a drop in major export prices and a steep decline in the number of tourists visiting Iceland. In this scenario, the banks’ capital ratios would fall by an average of 3½ percentage points, to a level close to the minimum capital ratios currently required by the Financial Supervisory Authority.