By Ásgeir Jónsson, Hersir Sigurgeirsson
This publication provides an in depth account of Iceland’s restoration from the tumultuous banking cave in that overturned its monetary in 2008. Early chapters recount how Iceland’s crucial financial institution was once not able to stick to the quantitative easing guidelines of the time to print cash and retailer the banks, whereas serving the world´s smallest foreign money quarter. The ebook is going directly to discover how the govt exercised strength majeure rights to enforce emergency laws geared toward combating the “socialization of losses”. Later chapters examine how, 8 years later, those guidelines have yielded renewed development and reinvigorated liquidity streams for the economic climate. The authors argue that Iceland, long-called the ‘canary within the coal mine’ of the constructed international, deals very important classes for the long run. This e-book can be worthy to all readers attracted to higher realizing the original historical past of Iceland’s banking obstacle and the phenomena of its recovery.
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Extra resources for The Icelandic Financial Crisis: A Study into the World´s Smallest Currency Area and its Recovery from Total Banking Collapse
For example: pp. 6–7 of the so-called Liikanen report, Erkki Liikanen (2012, October). High-level Expert Group on reforming the structure of the EU banking sector, Final Report; pp. 436–37 of Paulson, Henry (2010). On the Brink: Inside the Race to Stop the Collapse of the Global Financial System. ; Shockwaves that took Europe by surprise. (2008, October 4). The Financial Times. 5 2 The Worst Case Scenario 43 withdraw their money. On Sunday night, it was estimated that about €5 billion were needed as an emergency liquidity infusion for the Icelandic banks to keep their doors open in the following week.
Seen in aggregate, these groups presented the single greatest threat to the new banks. These populist challenges could only be answered with a democratic, or egalitarian, approach to debt relief – which was only comprehended by outsiders post factum. (See a detailed discussion in Sect. ) This absolute insistence on equal treatment caused a delay, of course. The debt reduction was implemented in several phases, and did not end until 2014 when a comprehensive household debt relief program, ﬁnanced with a tax on the old bank estates, was implemented.
The controls have not only chased away a lot of the pre-existing multinationals but also aspiring ones, which will now choose to be headquartered outside Iceland once they reach a certain level of development. Even though the controls will be removed – which is now about to happen – their return will always be anticipated. Neither Icelandic investors nor corporates want to be caught up in frozen funds again, locked in the Icelandic ﬁnancial system as happened in 2008. (See a detailed discussion in Sect.