Iceland expands policy framework with capital flow tool
Central bank imposes reserve requirements on capital inflows
The Central Bank of Iceland released the design of a long-awaited capital flow management tool on June 4, imposing reserve requirements on inward capital movements.
The new rules, which are already binding, mark the move to a new framework for monetary policy, something governor Már Guðmundsson has in the past called "inflation targeting plus".
By requiring 40% of inflows into certain instruments to sit for a year in special reserve accounts, the central bank hopes to insulate the small open
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