The solution involves settlement of a large portion of the claims that the Central Bank received as compensation for deposits transferred to it, in accordance with the decision of the Financial Supervisory Authority (FME) on the disposal of assets and liabilities of Sparisjóðabanki Íslands hf. (SPB) in March 2009. The settlement of the compensation has not been finalised, however, and the matter is still being considered by the Financial Supervisory Authority. The Central Bank has concluded agreements with eight savings banks concerning the settlement of claims, and the agreements will be finalised soon after the Financial Supervisory Authority and other creditors have confirmed them. I realise that it is painful for guarantee capital owners and creditors to lose these assets, which were deemed quite valuable before the crash and were perhaps purchased recently with borrowed money. Nonetheless, it is necessary to face facts and try to salvage the value that remains. I have always viewed the savings banks as an important part of a healthy financial system, as they have a certain advantage in assessing local opportunities and risks and are generally trusted in their home communities. But this makes it important that the savings banks limit their activities to the areas where they can compete, and not extend into risky investment banking operations. With the financial restructuring currently underway, it will be possible to strengthen the foundations of important savings banks.
I would also like to thank the Minster of Economic Affairs and his Ministry for successful co-operation in recent months. I want to extend my thanks to other Ministries and institutions as well, not least the Financial Supervisory Authority and the Ministry of Finance. Other collaborators, including financial institutions and non-governmental organisations, and the staff of the International Monetary Fund, also deserve thanks for their co-operative efforts. And last – but certainly not least – I would like to thank the employees of the Central Bank for their work. Without them, there would not be much wind in my sails today. And in closing, I wish to say this: Iceland has been faced serious economic difficulties in the recent past, and there are certain dangers ahead. But we have the power to steer clear of them. We could be at the bottom, poised to rise up again and move forward, if we play our cards right. But we must ensure that we avoid turbulent waters and establish long-term stability. In order to do so, we must demonstrate the patience and resilience to allow the recovery of the economy and the financial system to play out. History teaches us that pride goeth before a fall – but it also teaches us that the darkest hour is just before the dawn. Let us bear that in mind as we welcome the spring. BIS Review 39/2010  9