Lánamál ríkisins - Company Announcement

Amendments to Central Bank of Iceland Rules on Foreign Exchange and exemption lists

Amendments have been made to the Central Bank of Iceland exemption lists, which
are published on the Bank's website according to Articles 2 and 3 of the Rules
on Foreign Exchange, no. 565/2014S; cf. Article 13(b), Paragraph 4 of the
Foreign Exchange Act. The exemption lists now include only Treasury bills and
one Treasury bond, RIKB 15 0408. This change reduces the number of financial
instruments on the exemption lists. 

Therefore, cross-border movement of capital deriving from transactions with the
types of financial instrument specified on the current lists are still exempt
from the restrictions set forth in the Foreign Exchange Act, subject to the
fulfilment of the conditions further described in Articles 2 and 3 of the Rules
on Foreign Exchange. The Central Bank reserves the right to revise the current
exemption lists in view of the conditions prevailing at any given time. 

Concurrent with the changes in the Central Bank's exemption lists, amendments
have been made to the Rules on Foreign Exchange, no. 565/2014. Owners of bonds
no longer on the exemption lists are permitted to sell their financial
instruments. On the other hand, they are not permitted to invest in instruments
other than those exempted according to the decision of the Central Bank of
Iceland. 

Króna-denominated assets that are often referred to as offshore krónur and are
restricted by the capital controls currently amount to nearly 15% of GDP. The
purpose of the above-described amendments is to prepare for further steps
towards liberalisation of the controls. Among other things, this entails that
owners of these ISK assets will be offered investment options that greatly
reduce the likelihood of instability when the controls are lifted. In part, the
timing of the amendments to the exemption lists announced today aims to
preserve bond market efficiency. 

The Rules amending the Rules on Foreign Exchange, no. 565/2014, can be found
here. 

The exemption lists according to Articles 2 and 3 of the Rules on Foreign
Exchange, no. 565/2014, can be found here. 

Further information can be obtained from Már Guðmundsson, Governor of the
Central Bank of Iceland, at tel: +354 569 9615.