Investor Presentaiton
Better equipped to handle the recession than most
Both fiscal and monetary policy have the ammunition to support the economy
Before the pandemic hit the CBI, unlike
many central banks, still had the firepower to
support the economy. Even after taking
Central government debt (% of GDP)
Household and corporate debt (% of GDP)
100%
400%
90%
350%
drastic measures that include reductions in
interest rates, minimum reserve
requirements and countercyclical capital
buffers as well as launching a QE program,
interest rates remain high in international
comparison, creating scope for further rate
cuts. Furthermore, the CBI has hefty FX
reserves at its disposal
80%
70%
300%
60%
250%
50%
200%
40%
150%
30%
100%
20%
50%
10%
0%
0%
The CBI's FX reserves, well balanced
external trade, despite everything, and the
positive NIIP of the economy mean that
balance of payments worries are limited
More importantly, both the public and private
sectors used the last upswing to deleverage,
pushing debt levels to historic lows
2009
2010
2011
2012
Norway
2013
2014
2015
United Kingdom
2016
2017
2018
2019
Sweden
-Iceland
Key interest rates (seven-day term deposit rate)
7.0%
The Treasury is in a strong position to
support businesses and stimulate the
6.0%
5.0%
economy anew through infrastructure
investment when the pandemic is on the
decrease
4.0%
3.0%
So far the scope of the Government's
2.0%
measures amount to roughly 10% of GDP.
Further measures are expected
1.0%
Accumulated national savings for the last
0.0%
seven years are approx. 60% of GDP (2019)
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
2010
Households
CBI's FX reserves (bn. EUR)
876543210~
-1
-2
2003
2004
2005
2006
2007
2008
2008
2011
2012
X 2016
Net FX reserves
2017
2018
2011
2012
2013
2014
2015
â– Companies
2013
2014
2015
2016
2017
2018
2019
2019
2020
2009
2010
Total FX reserves
7
Sources: CBI, Statistics Iceland, Arion Bank
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