| Summary: | This paper presents an update on Iceland’s Financial System Stability Assessment. Liquidity ratios, while high, now depend more than before on access to central banks’ liquidity facilities because of the turmoil in global markets, and any reduction in such access would require changes in the banks' liquidity management strategy. Capital levels, although above minimum levels, are below the average of the five years and may not provide adequate buffers, in light of the deterioration in the global environment and market uncertainties about the strength of banks. ISCR;CR;bank capital;financial system;asset quality;bank assets;bank bankruptcy regime;credit market;net asset position;noncore assets;return on equity; counterparty risk; liquidity position; problem bank resolution option; banks' assets; capitalized bank; banks exposure; ensuring bank; Loans; Credit; Credit risk; Liquidity; Stress testing; Global
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