Because of the uncertainty that has surfaced concerning the interpretation of Article 8 of the Rules on Foreign Exchange, no. 1130/2008, as regards the purchase and transfer of foreign currency due to current transactions, the Central Bank of Iceland wishes to direct the following instructions to financial institutions: Article 1 Foreign transactions In the sense of Article 8, the free transferability of interest payments in Icelandic krónur applies only to interest payments by residents to nonresidents. As a result, it is not possible to convert the following into foreign currency: 1) interest on foreign financial instruments issued by non-residents in Icelandic krónur (e.g. Glacier bonds), 2) interest payments on Icelandic krónur accounts held at non-resident financial institutions, or 3) interest on any other financial asset/instrument issued by non-residents. Article 2 Calculation of interest and indexation The accrued interest on bonds may be transferred from the date of the interest payment. In the case of zero coupon bonds, the date of the interest payment is the date of the bond's redemption. For coupon bonds that accrue interest on a daily basis, the transferable amount is calculated proportional to the holding period. In the case of zero coupon bonds, the notional coupon shall be calculated as the difference between its issued discounted price and its redemption value. In both cases, interest is deemed to accrue on a straight-line basis. The indexation part of coupons is transferable, whereas the indexation part of the principal payment is not. Article 3 Dividends, equity income, and capital gains Dividends and other equity income may be converted to foreign currency and are transferable. Capital gains may not be converted or transferred. Article 4 Recent transactions All payments in accordance with Article 8 must be converted within 6 months of the date the balances are acquired. After that time, the authorisation for cross-border transfer shall expire. Article 5 Information disclosure requirement Financial institutions shall send information on all current movements in the sense of Article 8 by e-mail to the International and Market Operations Department of the Central Bank of Iceland: kronubord@sedlabanki.is. Data for each business day shall be received before 14:00 the following day of the time foreign currency is sold. The following information must be included: Bonds a. Name and/or national ID number of the owner b. Bond series c. Interest amount d. Coupon payment date and date of foreign exchange transaction Equities a. Name and/or national ID number of the owner b. Name of company c. Dividend amount d. Dividend date and date of foreign exchange transaction
- Instructions on the execution of foreign currency sales due to Article 8 of the Rules on Foreign Exchange, no. 1130/2008
| Source: Seðlabanki Íslands