In addition, there is now a broad consensus on risk measurement approaches. The main point that is still undecided and which continues to occupy the Committee members is the setting of the so-called “output floor” for banks that apply internal models. Let’s be clear: I read and hear the banking industry, and French banks in particular, giving its advice for negotiations on this point. A little restraint would not go amiss, and it is not our intention to defend corporate interests. If an output floor of 75% is not acceptable, it is because this floor – and consequently the standardised approach – would become the constraint for half of the international banks. I must stress that our goal is to  finalise Basel III, based on improved models that remain risk sensitive, and not to move onto Basel IV, which would use the standardised approach. Therefore, an agreement must be reached on a lower output floor along with a tightening of controls over the banks’ internal models, much like the targeted review of internal models (TRIM) that was approved for the Single Supervisory Mechanism and the results of which we are more than willing to submit to peerreview. This stance is shared at the very least by other European countries such as Germany and the Netherlands, and by the European Commission. International cooperation on financial reforms is a common good that has been extremely precious during these past eight years and is crucial to our future.
30 March 2017  Speech Már Guðmundsson, Governor of the Central Bank, delivered at the 56th Annual Meeting of the Central Bank of Iceland, 30 March 2017. Prime Minister, Minister of Finance and Economic Affairs, Speaker of Parliament, bank directors, foreign ambassadors, ladies and gentlemen! We have come together today for the 56th Annual Meeting of the Central Bank of Iceland. At the time of last year’s meeting, the domestic economy was considered relatively strong. GDP had risen above the pre-crisis peak. National income had risen even more in recent years because of improved terms of trade. Unlike many previous periods of full employment, the economy was well balanced internally and externally, as could be seen in a two-year period of inflation at or below target and a sizeable current account surplus. This was a good position, but we also realised that it could be fragile, as demand pressures were mounting and there was a real risk of overheating. Developments internationally had been favourable for us in many ways, but the tide could turn. We therefore needed to be on the watch, and economic policy had to take this risk into consideration. Then what do we say now, when growth has accelerated even further and demand pressures are even greater, yet inflation has remained below target, inflation expectations have subsided to target, the 2016 current account surplus was at a historical high, and we own more than we owe abroad?