Iceland's Althing, one of the oldest parliaments in the world, recently passed a new Central Bank Act to merge the Central Bank of Iceland and the Financial Supervisory Authority into one institution as of the beginning of next year. The Act is to make no changes to the tasks entrusted to these two institutions.

The Act describes the integration of tasks within one institution, its governance and its decision-making arrangements. In view of Iceland's recent economic past, in which it defaulted on its national debt, financial stability was uppermost in the Althing's mind.

The Prime Minister’s Office published a report on the merger a while ago. The Prime Minister appoints the Governor for a term of five years, at a maximum of two times. There is to be a Monetary Policy Committee, a Financial Stability Committee and a Financial Supervisory Committee, each composed of 5-7 appointees, drawn from both Central Bank officials and external experts in the relevant field.

Every five years, the minister is obliged to entrust three 'independent' experts with an audit of how the Central Bank of Iceland has succeeded in meeting the objectives of stable prices, financial stability and the supervision of finance.