It is owned by the Icelandic government, and is administered by a governor and a seven-member supervisory board, elected by the country's parliament following each general election.

[2] It has the sole right to issue notes and coins of Icelandic krónur and to manage the state's foreign currency reserves.

In 2015, after the 2008–2011 Icelandic financial crisis, the government of Iceland considered "a revolutionary monetary proposal" to abolish private money creation and to end to fractional-reserve banking.

[3] Similar to the Swiss Sovereign Money Initiative, this plan would remove the power of money creation from the commercial banks and give it to the Central Bank of Iceland.

[citation needed] On 1 January 2020, the Central Bank of Iceland absorbed the Financial Supervisory Authority, previously an independent institution established in 1999.