Fri., April 3, 2015
After more than six long and lonely years, Iceland is hoping its financial isolation will soon be over. The North Atlantic nation, whose spectacular 2008 meltdown came to symbolise the greed and mismanagement of the global financial system, is expected to begin unwinding the bankruptcies of its three main banks and lifting controls on the movement of capital in and out of the island within months. For Iceland, these moves will signal rehabilitation and a return to the international financial community after the collapse of a banking system which at one time held assets worth a staggering ten times the nation’s gross domestic product. The collapse infuriated some European countries which were left on the hook for billions of dollars in compensation to depositors in failed Icelandic banks, and left Iceland shunned by Western nations in its hour of need. At the low point in October 2008, Britain used anti-terrorism legislation against the country - forcing international bankers to pick up their bags in the middle of crisis meetings and head to the airport. Now, Iceland hopes that by finally lifting capital controls it can draw a line under the crisis, restore its credit rating, lower its borrowing costs, boost its economy and revive the living standards of its 330,000 people. But to do so, it must find a way to let investors withdraw funds without provoking a catastrophic stampede.