meta_id 3312988

On July 9, 2026, the Icelandic Government opened a consultation on implementing a European Union regulation that temporarily adjusts capital requirements for credit institutions regarding market risk until the end of 2029. The consultation concerns the implementation of a new EU regulation addressing capital requirements for banks under market risk provisions. The adjustment responds to delays in implementing equivalent changes outside the EU, particularly in the United States and the United Kingdom. The temporary measure aims to prevent Icelandic and European Economic Area (EEA) credit institutions from facing higher capital requirements than competitors outside the region, which could undermine their competitive position. The proposed regulation does not delay the implementation of new market risk rules but instead provides a transitional calculation adjustment for capital requirements, maintaining comparability with existing rules through the end of 2029. The regulatory framework stems from the Capital Requirements Regulation (CRR) III, which implements the Basel III international prudential standards for banks. These standards were developed following the 2007-2008 financial crisis to strengthen banking sector resilience. The CRR III rules make capital requirements more risk-sensitive and enhance supervisory oversight of banks' risk assessment models. Iceland incorporated CRR III into domestic law through Act No. 102/2025 amending the Financial Undertakings Act, No. 161/2002, which took effect in late December 2025. The proposed regulation will be implemented by amending Article 1(c) of the Financial Undertakings Act, with an anticipated effective date of January 1, 2027, aligning implementation with the EU. The consultation period runs from July 9 to August 13, 2026. Iceland will assume international legal obligations to incorporate the regulation into domestic law once it is formally adopted into the EES Agreement. Responses should be submitted to the Financial Market Authority office at gunnlaugur.helgason@fjr.is.