Learning from Icelandic Economics; Banking Crisis Management

Learning from Icelandic Economics; Banking Crisis Management

Having just returned from a trip to the Land of Ice & Fire, that is Iceland – a country that is finally lifting controls imposed during its Banking Crisis management in 2008, I couldn’t escape the aura of regeneration, honesty & freshness that revealed itself during my stay. Earlier this summer, Katrín Júlíusdóttir the Icelandic Finance Minister announced the end of capital controls –or limitations on what people there can do with their money– imposed after the 2008 crash. While other countries are still suffering from flat inflation and badly behaved, but contrite bankers eye-balling Tribunals’ Investigators, Minister Júlíusdóttir has announced a 39 per cent tax on investors looking to take their money overseas. This summer Iceland imposed the tax to prevent it haemorrhaging money as it loosens bank laws imposed six years ago, when Iceland made the shocking decision to let its banks go bust. Rather than maintaining the value of the Krona artificially, Iceland chose to accept inflation in a lesson to leading global nations on Icelandic Economics. This pushed prices higher at home but helped exports abroad – in contrast to many countries in the EU, which are now fighting deflation, or prices that keep decreasing year on year. Iceland also allowed bankers to be prosecuted as criminals – in contrast to the US and Europe, where banks were fined, but chief executives escaped punishment. The chief executive, chairman, Luxembourg ceo., and second largest shareholder of Kaupthing, an Icelandic bank that collapsed, were sentenced in February to between four and five years in prison for market manipulation and economic fraud. “Why should we have a part...