It would not be proper for me to say anything about the ongoing investigations beyond the joint statement issued last week. It would also not be proper for me to comment on any specific institution beyond MAS’ statement last week because the supervisory examinations are still ongoing and we have to be fair to the institutions. The two statements last week are unprecedented. We have already said a lot more publicly than we usually do when investigations and reviews have not been completed yet. Instead, I want to focus today on what the findings imply for our financial sector. There is no doubt that the recent findings have made a dent in our reputation as a clean and trusted financial centre. MAS is disappointed with the lapses in AML/CFT controls and breaches of AML/CFT regulations that we have picked up in our FIs. I am told that money laundering is growing more sophisticated in nature and is carefully designed to avoid detection; that these incidents happen in every financial centre and the large and rising frequency in which fines are imposed in other jurisdictions show we are not alone in facing this challenge; and that the rules and practices here are already very strict and on par with global standards. BIS central bankers’ speeches  5  This may all be true but they cannot be an excuse for what has taken place. What happened is simply unacceptable. We may not be any worse than other jurisdictions. But that is no consolation.
Már Guðmundsson: Iceland – recent economic developments, conditions and outlook Keynote address by Mr Már Guðmundsson, Governor of the Central Bank of Iceland, at the 51st Annual General Meeting of the Central Bank of Iceland, Reykjavik, 29 March 2012. *  *  *  Prime Minister; Minister of Finance; Chairman; Directors and Ambassadors; Ladies and Gentlemen: As we convene for the 51st Annual General Meeting of the Central Bank of Iceland, the economic recovery that began late in 2010 is gaining momentum in spite of international headwinds, while inflation has been higher and more persistent than was considered likely last year. It is important, too, to note that inflation is driven much more strongly by domestic factors than it was around this time last year, with wages rising in excess of increases in productivity and the nominal exchange rate declining in the recent term. According to preliminary estimates, GDP grew by 3.1% in 2011. In international terms, this compares well, as output growth in the OECD averaged 2% last year. However, it should be borne in mind that the economic recovery began later in Iceland than in most OECD countries. Business investment and private consumption contributed equally to growth, about 2 percentage points each. The contribution from factors was negative, however. This growth was not borrowed, either: last year’s underlying current account surplus measured roughly 3% of GDP. In some respects, the composition of last year’s output growth lays a sound foundation for continued economic recovery.